Text: H.R.2264 — 103rd Congress (1993-1994)All Bill Information (Except Text)

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[Congressional Bills 103th Congress]
[From the U.S. Government Printing Office]
[H.R. 2264 Enrolled Bill (ENR)]

        H.R.2264
                       One Hundred Third Congress

                                 of the

                        United States of America


                          AT THE FIRST SESSION

          Begun and held at the City of Washington on Tuesday,
  the fifth day of January, one thousand nine hundred and ninety-three


                                 An Act

  
 
  To provide for reconciliation pursuant to section 7 of the concurrent 
resolution

                   on the budget for fiscal year 1994.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Omnibus Budget Reconciliation Act of 
1993''.

SEC. 2. TABLE OF CONTENTS.

    The table of contents is as follows:

               TITLE I--AGRICULTURE AND RELATED PROVISIONS

                   TITLE II--ARMED SERVICES PROVISIONS

                TITLE III--BANKING AND HOUSING PROVISIONS

              TITLE IV--STUDENT LOANS AND ERISA PROVISIONS

           TITLE V--TRANSPORTATION AND PUBLIC WORKS PROVISIONS

  TITLE VI--COMMUNICATIONS LICENSING AND SPECTRUM ALLOCATION PROVISIONS

           TITLE VII--NUCLEAR REGULATORY COMMISSION PROVISIONS

           TITLE VIII--PATENT AND TRADEMARK OFFICE PROVISIONS

                  TITLE IX--MERCHANT MARINE PROVISIONS

                  TITLE X--NATURAL RESOURCES PROVISIONS

           TITLE XI--CIVIL SERVICE AND POST OFFICE PROVISIONS

                 TITLE XII--VETERANS' AFFAIRS PROVISIONS

  TITLE XIII--REVENUE, HEALTH CARE, HUMAN RESOURCES, INCOME SECURITY, 
   CUSTOMS AND TRADE PROVISIONS, FOOD STAMP PROGRAM, AND TIMBER SALE 
                               PROVISIONS

                  TITLE XIV--BUDGET PROCESS PROVISIONS

                     TITLE I--AGRICULTURAL PROGRAMS

SEC. 1001. SHORT TITLE AND TABLE OF CONTENTS.

    (a) Short Title.--This title may be cited as the ``Agricultural 
Reconciliation Act of 1993''.
    (b) Table of Contents.--The table of contents of this title is as 
follows:
Sec. 1001. Short title and table of contents.

                     Subtitle A--Commodity Programs

Sec. 1101. Upland cotton program.
Sec. 1102. Wheat program.
Sec. 1103. Feed grain program.
Sec. 1104. Rice program.
Sec. 1105. Dairy program.
Sec. 1106. Tobacco program.
Sec. 1107. Sugar program.
Sec. 1108. Oilseeds program.
Sec. 1109. Peanut program.
Sec. 1110. Honey program.
Sec. 1111. Wool and mohair program.

                    Subtitle B--Rural Electrification

Sec. 1201. Refinancing and prepayment of FFB loans.

                     Subtitle C--Agricultural Trade

Sec. 1301. Acreage reduction requirements.
Sec. 1302. Market promotion program.

                        Subtitle D--Miscellaneous

Sec. 1401. Admission, entrance, and recreation fees.
Sec. 1402. Environmental conservation acreage reserve program 
          amendments.
Sec. 1403. Federal crop insurance.
                     Subtitle A--Commodity Programs

SEC. 1101. UPLAND COTTON PROGRAM.

    (a) In General.--Section 103B of the Agricultural Act of 1949 (7 
U.S.C. 1444-2) is amended--
        (1) in the section heading, by striking ``1995'' and inserting 
    ``1997'';
        (2) in subsections (a)(1), (b)(1), (c)(1)(A), (c)(1)(B)(ii), and 
    (o), by striking ``1995'' each place it appears and inserting 
    ``1997'';
        (3) in subparagraphs (B)(i), (D)(i), (E)(i), and (F)(i) of 
    subsection (a)(5), by striking ``1996'' each place it appears and 
    inserting ``1998'';
        (4) in subsection (c)(1)(D)--
            (A) in the subparagraph heading, by striking ``50/92 
        program'' and inserting ``50/85 program'';
            (B) by inserting after ``8 percent'' both places it appears 
        the following: ``for each of the 1991 through 1993 crops, and 15 
        percent for each of the 1994 through 1997 crops (except as 
        provided in clause (v)(II)),''; and
            (C) in clause (v)--
                (i) by striking ``(v) Prevented planting.--If'' and 
            inserting the following:
                ``(v) Prevented planting and reduced yields.--

                    ``(I) 1991 through 1993 crops.--In the case of each 
                of the 1991 through 1993 crops of upland cotton, if''; 
                and

                (ii) by adding at the end the following new subclause:

                    ``(II) 1994 through 1997 crops.--In the case of each 
                of the 1994 through 1997 crops of upland cotton, 
                producers on a farm shall be eligible to receive 
                deficiency payments as provided in clause (iii) if an 
                acreage limitation program under subsection (e) is in 
                effect for the crop and--

                        ``(aa) the producers have been determined by the 
                    Secretary (in accordance with section 503(c)) to be 
                    prevented from planting the crop or have incurred a 
                    reduced yield for the crop (due to a natural 
                    disaster) and the producers elect to devote a 
                    portion of the maximum payment acres for upland 
                    cotton (as calculated under subparagraph (C)(ii)) 
                    equal to more than 8 percent of the upland cotton 
                    acreage, to conservation uses; or
                        ``(bb) the producers elect to devote a portion 
                    of the maximum payment acres for upland cotton (as 
                    calculated under subparagraph (C)(ii)) equal to more 
                    than 8 percent of the upland cotton acreage, to 
                    alternative crops as provided in subparagraph 
                    (E).''; and
        (5) in subsection (e)(1)(D), by inserting after ``30 percent'' 
    the following: ``for each of the 1991 through 1994 crops, 29\1/2\ 
    percent for each of the 1995 and 1996 crops, and 29 percent for the 
    1997 crop''.
    (b) Provisions Necessary to the Operation of the Program.--
        (1) Deficiency and land diversion payments.--Section 114 of the 
    Agricultural Act of 1949 (7 U.S.C. 1445j) is amended by striking 
    ``1995'' each place it appears in subsections (a)(1) and (c) and 
    inserting ``1997''.
        (2) Acreage base and yield system.--Title V of such Act (7 
    U.S.C. 1461 et seq.) is amended--
            (A) in section 503 (7 U.S.C. 1463)--
                (i) in subsection (c)(3)--

                    (I) by striking ``0/92 or 50/92''; and
                    (II) by striking ``1995'' and inserting ``1997''; 
                and

                (ii) in subsection (h)(2)(A), by striking ``1995'' each 
            place it appears and inserting ``1997'';
            (B) in paragraphs (1) and (2) of section 505(b) (7 U.S.C. 
        1465(b)), by striking ``1995'' each place it appears and 
        inserting ``1997''; and
            (C) in section 509 (7 U.S.C. 1469), by striking ``1995'' and 
        inserting ``1997''.
        (3) Payment limitations.--The Food Security Act of 1985 (Public 
    Law 99-198; 99 Stat. 1354) is amended--
            (A) in paragraphs (1)(A), (1)(B), and (2)(A) of section 1001 
        (7 U.S.C. 1308), by striking ``1995'' each place it appears and 
        inserting ``1997''; and
            (B) in section 1001C(a) (7 U.S.C. 1308-3(a)), by striking 
        ``1995'' both places it appears and inserting ``1997''.

SEC. 1102. WHEAT PROGRAM.

    Section 107B(c)(1)(E) of the Agricultural Act of 1949 (7 U.S.C. 
1445b-3a(c)(1)(E)) is amended--
        (1) in the subparagraph heading, by striking ``0/92 program'' 
    and inserting ``0/85 program'';
        (2) in clause (i), by inserting after ``8 percent'' both places 
    it appears the following: ``for each of the 1991 through 1993 crops, 
    and 15 percent for each of the 1994 through 1997 crops (except as 
    provided in clause (vii)),''; and
        (3) by adding at the end of the subparagraph the following new 
    clause:
                ``(vii) Exceptions to 0/85.--In the case of each of the 
            1994 through 1997 crops of wheat, producers on a farm shall 
            be eligible to receive deficiency payments as provided in 
            clause (ii) if an acreage limitation program under 
            subsection (e) is in effect for the crop and--

                    ``(I)(aa) the producers have been determined by the 
                Secretary (in accordance with section 503(c)) to be 
                prevented from planting the crop or have incurred a 
                reduced yield for the crop (due to a natural disaster); 
                and
                    ``(bb) the producers elect to devote a portion of 
                the maximum payment acres for wheat (as calculated under 
                subparagraph (C)(ii)) equal to more than 8 percent of 
                the wheat acreage, to conservation uses; or
                    ``(II) the producers elect to devote a portion of 
                the maximum payment acres for wheat (as calculated under 
                subparagraph (C)(ii)) equal to more than 8 percent of 
                the wheat acreage, to alternative crops as provided in 
                subparagraph (F).''.

SEC. 1103. FEED GRAIN PROGRAM.

    Section 105B(c)(1)(E) of the Agricultural Act of 1949 (7 U.S.C. 
1444f(c)(1)(E)) is amended--
        (1) in the subparagraph heading, by striking ``0/92 program'' 
    and inserting ``0/85 program'';
        (2) in clause (i), by inserting after ``8 percent'' both places 
    it appears the following: ``for each of the 1991 through 1993 crops, 
    and 15 percent for each of the 1994 through 1997 crops (except as 
    provided in clause (vii)),''; and
        (3) by adding at the end of the subparagraph the following new 
    clause:
                ``(vii) Exceptions to 0/85.--In the case of each of the 
            1994 through 1997 crops of feed grains, producers on a farm 
            shall be eligible to receive deficiency payments as provided 
            in clause (ii) if an acreage limitation program under 
            subsection (e) is in effect for the crop and--

                    ``(I)(aa) the producers have been determined by the 
                Secretary (in accordance with section 503(c)) to be 
                prevented from planting the crop or have incurred a 
                reduced yield for the crop (due to a natural disaster); 
                and
                    ``(bb) the producers elect to devote a portion of 
                the maximum payment acres for feed grains (as calculated 
                under subparagraph (C)(ii)) equal to more than 8 percent 
                of the feed grain acreage, to conservation uses; or
                    ``(II) the producers elect to devote a portion of 
                the maximum payment acres for feed grains (as calculated 
                under subparagraph (C)(ii)) equal to more than 8 percent 
                of the feed grain acreage, to alternative crops as 
                provided in subparagraph (F).''.

SEC. 1104. RICE PROGRAM.

    Section 101B(c)(1)(D) of the Agricultural Act of 1949 (7 U.S.C. 
1441-2(c)(1)(D)) is amended--
        (1) in the subparagraph heading, by striking ``50/92 program'' 
    and inserting ``50/85 program'';
        (2) in clause (i), by inserting after ``8 percent'' both places 
    it appears the following: ``for each of the 1991 through 1993 crops, 
    and 15 percent for each of the 1994 through 1997 crops (except as 
    provided in clause (v)(II)),''; and
        (3) in clause (v)--
            (A) by striking ``(v) Prevented planting.--If'' and 
        inserting the following:
                ``(v) Prevented planting and reduced yields.--

                    ``(I) 1991 through 1993 crops.--In the case of each 
                of the 1991 through 1993 crops of rice, if''; and

            (B) by adding at the end the following new subclause:

                    ``(II) 1994 through 1997 crops.--In the case of each 
                of the 1994 through 1997 crops of rice, producers on a 
                farm shall be eligible to receive deficiency payments as 
                provided in clause (iii) if an acreage limitation 
                program under subsection (e) is in effect for the crop 
                and--

                        ``(aa) the producers have been determined by the 
                    Secretary (in accordance with section 503(c)) to be 
                    prevented from planting the crop or have incurred a 
                    reduced yield for the crop (due to a natural 
                    disaster) and the producers elect to devote a 
                    portion of the maximum payment acres for rice (as 
                    calculated under subparagraph (C)(ii)) equal to more 
                    than 8 percent of the rice acreage, to conservation 
                    uses; or
                        ``(bb) the producers elect to devote a portion 
                    of the maximum payment acres for rice (as calculated 
                    under subparagraph (C)(ii)) equal to more than 8 
                    percent of the rice acreage, to alternative crops as 
                    provided in subparagraph (E).''.

SEC. 1105. DAIRY PROGRAM.

    (a) In General.--Section 204 of the Agricultural Act of 1949 (7 
U.S.C. 1446e) is amended--
        (1) in the section heading, by striking ``1995'' and inserting 
    ``1996'';
        (2) in subsections (a), (b), (d)(1)(A), (d)(2)(A), (d)(3), 
    (g)(1), and (k), by striking ``1995'' each place it appears and 
    inserting ``1996'';
        (3) in subsection (c)(3)--
            (A) in the first sentence of subparagraph (A), by striking 
        ``The Secretary'' and inserting ``Subject to subparagraph (B), 
        the Secretary'';
            (B) by redesignating subparagraph (B) as subparagraph (C); 
        and
            (C) by inserting after subparagraph (A) the following new 
        subparagraph:
            ``(B) Guidelines.--In the case of purchases of butter and 
        nonfat dry milk that are made by the Secretary under this 
        section on or after the date of enactment of the Omnibus Budget 
        Reconciliation Act of 1993, in allocating the rate of price 
        support between the purchase prices of butter and nonfat dry 
        milk under this paragraph, the Secretary may not--
                ``(i) offer to purchase butter for more than $0.65 per 
            pound; or
                ``(ii) offer to purchase nonfat dry milk for less than 
            $1.034 per pound.'';
        (4) in subsection (h)(2)--
            (A) by striking ``and'' at the end of subparagraph (A);
            (B) by striking the period at the end of subparagraph (B) 
        and inserting ``; and''; and
            (C) by adding at the end the following new subparagraph:
            ``(C) during each of calendar years 1996 and 1997, 10 cents 
        per hundredweight of milk marketed, which rate shall be adjusted 
        on or before May 1 of the respective calendar year in the manner 
        provided in subparagraph (B).''; and
        (5) in subsection (g)(2), by striking ``1994'' and inserting 
    ``1996''.
    (b) Provisions Necessary to the Operation of the Program.--Section 
101(b) of the Agriculture and Food Act of 1981 (7 U.S.C. 608c note) is 
amended by striking ``1995'' and inserting ``1996''.
    (c) Reduction in Price Received.--
        (1) Definitions.--As used in this subsection:
            (A) Bovine growth hormone.--The term ``bovine growth 
        hormone'' means a synthetic growth hormone produced through the 
        process of recombinant DNA techniques that is intended for use 
        in bovine animals.
            (B) Date of approval.--The term ``date of approval'' means 
        the date the Food and Drug Administration, pursuant to authority 
        under section 512 of the Federal Food, Drug, and Cosmetic Act 
        (21 U.S.C. 360b), first approves an application with respect to 
        the use of bovine growth hormone.
        (2) Reduction in price received.--In order to offset the 
    economic effects of the sale of bovine growth hormone, the Secretary 
    of Agriculture shall decrease the amount of the reduction in price 
    received by producers specified in subparagraph (B) or (C) (as 
    appropriate) of section 204(h)(2) of the Agricultural Act of 1949 (7 
    U.S.C. 1446e(h)(2)) by 10 percent during the period beginning on the 
    date of approval and ending 90 days after the date of approval and, 
    during the period, it shall be unlawful for a person to sell bovine 
    growth hormone for commercial agricultural purposes.

SEC. 1106. TOBACCO PROGRAM.

    (a) Domestic Marketing Assessment.--Part I of subtitle B of title 
III of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1311 et seq.) 
is amended by adding at the end the following new section:

``SEC. 320C. DOMESTIC MARKETING ASSESSMENT.

    ``(a) Certification.--A domestic manufacturer of cigarettes shall 
certify to the Secretary, for each calendar year, the percentage of the 
quantity of tobacco used by the manufacturer to produce cigarettes 
during the year that is produced in the United States.
    ``(b) Penalties.--
        ``(1) In general.--Subject to subsection (f), a domestic 
    manufacturer of cigarettes that has failed, as determined by the 
    Secretary after notice and opportunity for a hearing, to use in the 
    manufacture of cigarettes during a calendar year a quantity of 
    tobacco grown in the United States that is at least 75 percent of 
    the total quantity of tobacco used by the manufacturer, or to comply 
    with subsection (a), shall be subject to the requirements of 
    subsections (c), (d), and (e).
        ``(2) Failure to certify.--For purposes of this section, if a 
    manufacturer fails to comply with subsection (a), the manufacturer 
    shall be presumed to have used only imported tobacco in the 
    manufacture of cigarettes produced by the manufacturer.
        ``(3) Reports and records.--
            ``(A) In general.--The Secretary shall require manufacturers 
        of domestic cigarettes to make such reports and maintain such 
        records as are necessary to carry out this section. If the 
        reports and records are insufficient, the Secretary may request 
        other persons to provide supplemental information.
            ``(B) Examinations.--For the purpose of ascertaining the 
        correctness of any report or record required under this section, 
        or of obtaining further information required under this section, 
        the Secretary and the Office of Inspector General may examine 
        such records, books, and other materials as the Secretary has 
        reason to believe may be relevant. In the case of a manufacturer 
        of domestic cigarettes, the Secretary may charge a fee to the 
        manufacturer to cover the reasonable costs of any such 
        examination.
            ``(C) Penalties.--Any person who fails to provide 
        information required under this paragraph or who provides false 
        information under this paragraph shall be subject to section 
        1001 of title 18, United States Code.
            ``(D) Confidentiality.--Section 320A(c) shall apply to 
        information submitted by manufacturers of domestic cigarettes 
        and other persons under this paragraph.
            ``(E) Disclosure.--Notwithstanding any other provision of 
        law, information on the percentage or quantity of domestic or 
        imported tobacco in cigarettes or on the volume of cigarette 
        production that is submitted under this section shall be exempt 
        from disclosure under section 552 of title 5, United States 
        Code.
    ``(c) Domestic Marketing Assessment.--
        ``(1) In general.--A domestic manufacturer of cigarettes 
    described in subsection (b) shall remit to the Commodity Credit 
    Corporation a nonrefundable marketing assessment in accordance with 
    this subsection.
        ``(2) Amount.--The amount of an assessment imposed on a 
    manufacturer under this subsection shall be determined by 
    multiplying--
            ``(A) the quantity by which the quantity of imported tobacco 
        used by the manufacturer to produce cigarettes during a 
        preceding calendar year exceeds 25 percent of the quantity of 
        all tobacco used by the manufacturer to produce cigarettes 
        during the preceding calendar year; by
            ``(B) the difference between--
                ``(i) \1/2\ of the sum of--

                    ``(I) the average price per pound received by 
                domestic producers for Burley tobacco during the 
                preceding calendar year; and
                    ``(II) the average price per pound received by 
                domestic producers for Flue-cured tobacco during the 
                preceding calendar year; and

                ``(ii) the average price per pound of unmanufactured 
            imported tobacco during the preceding calendar year, as 
            determined by the Secretary.
        ``(3) Collection.--An assessment imposed under this subsection 
    shall be--
            ``(A) collected by the Secretary and transmitted to the 
        Commodity Credit Corporation; and
            ``(B) enforced in the same manner as provided in section 
        320B.
    ``(d) Purchase of Burley Tobacco.--
        ``(1) In general.--A domestic manufacturer of cigarettes 
    described in subsection (b) shall purchase from the inventories of 
    the producer-owned cooperative marketing associations for Burley 
    tobacco described in section 320B(a)(2), at the applicable list 
    price published by the association, the quantity of tobacco 
    described in paragraph (2).
        ``(2) Quantity.--Subject to paragraph (3), the quantity of 
    Burley tobacco required to be purchased by a manufacturer during a 
    calendar year under this subsection shall equal \1/2\ of the 
    quantity of imported tobacco used by the manufacturer to produce 
    cigarettes during the preceding calendar year that exceeds 25 
    percent of the quantity of all tobacco used by the manufacturer to 
    produce cigarettes during the preceding calendar year.
        ``(3) Limitation.--If the total quantity of Burley tobacco 
    required to be purchased by all manufacturers under paragraph (2) 
    would reduce the inventories of the producer-owned cooperative 
    marketing associations for Burley tobacco to less than the reserve 
    stock level for Burley tobacco, the Secretary shall reduce the 
    quantity of tobacco required to be purchased by manufacturers under 
    paragraph (2), on a pro rata basis, to ensure that the inventories 
    will not be less than the reserve stock level for Burley tobacco.
        ``(4) Noncompliance.--If a manufacturer fails to purchase from 
    the inventories of the producer-owned cooperative marketing 
    associations the quantity of Burley tobacco required under this 
    subsection, the manufacturer shall be subject to a penalty of 75 
    percent of the average market price (calculated to the nearest whole 
    cent) for Burley tobacco for the immediately preceding year on the 
    quantity of tobacco as to which the failure occurs.
        ``(5) Purchase requirements.--Tobacco purchased by a 
    manufacturer under this subsection shall not be included in 
    determining the quantity of tobacco purchased by the manufacturer 
    under section 320B.
    ``(e) Purchase of Flue-Cured Tobacco.--
        ``(1) In general.--A domestic manufacturer of cigarettes 
    described in subsection (b) shall purchase from the inventories of 
    the producer-owned cooperative marketing association for Flue-cured 
    tobacco described in section 320B(a)(2), at the applicable list 
    price published by the association, the quantity of tobacco 
    described in paragraph (2).
        ``(2) Quantity.--Subject to paragraph (3), the quantity of Flue-
    cured tobacco required to be purchased by a manufacturer during a 
    calendar year under this subsection shall equal \1/2\ of the 
    quantity of imported tobacco used by the manufacturer to produce 
    cigarettes during the preceding calendar year that exceeds 25 
    percent of the quantity of all tobacco used by the manufacturer to 
    produce cigarettes during the preceding calendar year.
        ``(3) Limitation.--If the total quantity of Flue-cured tobacco 
    required to be purchased by all manufacturers under paragraph (2) 
    would reduce the inventories of the producer-owned cooperative 
    marketing association for Flue-cured tobacco to less than the 
    reserve stock level for Flue-cured tobacco, the Secretary shall 
    reduce the quantity of tobacco required to be purchased by 
    manufacturers under paragraph (2), on a pro rata basis, to ensure 
    that the inventories will not be less than the reserve stock level 
    for Flue-cured tobacco.
        ``(4) Noncompliance.--If a manufacturer fails to purchase from 
    the inventories of the producer-owned cooperative marketing 
    association the quantity of Flue-cured tobacco required under this 
    subsection, the manufacturer shall be subject to a penalty of 75 
    percent of the average market price (calculated to the nearest whole 
    cent) for Flue-cured tobacco for the immediately preceding year on 
    the quantity of tobacco as to which the failure occurs.
        ``(5) Purchase requirements.--Tobacco purchased by a 
    manufacturer under this subsection shall not be included in 
    determining the quantity of tobacco purchased by the manufacturer 
    under section 320B.
    ``(f) Crop Losses Due to Disasters.--
        ``(1) In general.--If the Secretary, in consultation with 
    producer-owned cooperative marketing associations, determines that 
    because of drought, insect or disease infestation, or other natural 
    disaster, or other condition beyond the control of producers, the 
    total quantity of a crop of domestic Burley tobacco or Flue-cured 
    tobacco that is harvested and suitable for marketing is 
    substantially less than the expected yield for the crop, and that 
    pool inventories for the kind of tobacco involved have been 
    depleted, effective for the calendar year following the year in 
    which the crop loss occurs, the Secretary may reduce the minimum 
    percentage of domestic tobacco specified in subsection (a) to a 
    percentage below 75 percent, as determined by the Secretary, that 
    reflects the reduced availability of domestic supplies of the kind 
    of tobacco involved.
        ``(2) Determination of expected yield.--For purposes of 
    paragraph (1), the Secretary shall determine the expected yield for 
    a crop of Burley tobacco or Flue-cured tobacco by taking into 
    consideration--
            ``(A) the total acreage planted to the crop (including 
        acreage that the producers were prevented from planting because 
        of a condition referred to in paragraph (1)); and
            ``(B) normal farm yields established for the crop.
        ``(3) Deadline for determinations.--The Secretary shall make 
    determinations under paragraph (1) about crop losses and announce 
    the reduced percentage of the domestic tobacco pool not later than 
    November 30 of the year in which the applicable crop of Burley 
    tobacco or Flue-cured tobacco is harvested.''.
    (b) Budget Deficit Assessment.--
        (1) In general.--Section 106 of the Agricultural Act of 1949 (7 
    U.S.C. 1445) is amended by adding at the end the following new 
    subsection:
    ``(h)(1) Effective only for each of the 1994 through 1998 crops of 
tobacco, an importer of tobacco that is produced outside the United 
States shall remit to the Commodity Credit Corporation a nonrefundable 
marketing assessment in an amount equal to the product obtained by 
multiplying--
        ``(A) the number of pounds of tobacco that is imported by the 
    importer; by
        ``(B) the sum of--
            ``(i) the per pound marketing assessment imposed on 
        purchasers of domestic Burley tobacco pursuant to subsection 
        (g); and
            ``(ii) the per pound marketing assessment imposed on 
        purchasers of domestic Flue-cured tobacco pursuant to subsection 
        (g).
    ``(2) An assessment imposed under this subsection shall be paid by 
the importer.
    ``(3)(A) The importer shall remit the assessment at such time and in 
such manner as may be prescribed by the Secretary.
    ``(B) If the importer fails to comply with subparagraph (A), the 
importer shall be liable, in addition, for a marketing penalty at a rate 
equal to 37.5 percent of the sum of the average market price (calculated 
to the nearest whole cent) of Flue-cured and Burley tobacco for the 
immediately preceding year on the quantity of tobacco as to which the 
failure occurs.
    ``(C) This subsection shall be enforced in the same manner as 
subparagraphs (B) and (C) of paragraph (1), and paragraphs (2) and (3), 
of section 106A(h).
    ``(4) Any penalty collected by the Secretary under this subsection 
shall be deposited for use by the Commodity Credit Corporation.''.
        (2) Importer assessments for no net cost tobacco fund.--Section 
    106A of such Act (7 U.S.C. 1445-1) is amended--
            (A) in subsection (c), by inserting ``and importers'' after 
        ``purchasers'';
            (B) in subsection (d)(1)(A)--
                (i) by striking ``and'' at the end of clause (i); and
                (ii) by inserting after clause (ii) the following new 
            clause:
                ``(iii) each importer of Flue-cured or Burley tobacco 
            shall pay to the appropriate association, for deposit in the 
            Fund of the association, an assessment, in an amount that is 
            equal to the product obtained by multiplying--

                    ``(I) the number of pounds of tobacco that is 
                imported by the importer; by
                    ``(II) the sum of the amount of per pound producer 
                contributions and purchaser assessments that are payable 
                by domestic producers and purchasers of Flue-cured and 
                Burley tobacco under clauses (i) and (ii); and'';

            (C) in subsection (d)(2)--
                (i) by inserting ``or importer'' after ``or purchaser'';
                (ii) by striking ``and'' at the end of subparagraph (B);
                (iii) by inserting ``and'' at the end of subparagraph 
            (C); and
                (iv) by adding at the end the following new 
            subparagraph:
            ``(D) if the tobacco involved is imported by an importer, 
        from the importer.''; and
            (D) in subsection (h)(1)--
                (i) by redesignating subparagraphs (B) and (C) as 
            subparagraphs (C) and (D), respectively; and
                (ii) by inserting after subparagraph (A) the following 
            new subparagraph:
    ``(B) Each importer who fails to pay to the association an 
assessment as required by subsection (d)(2) at such time and in such 
manner as may be prescribed by the Secretary, shall be liable, in 
addition to any amount due, for a marketing penalty at a rate equal to 
75 percent of the average market price (calculated to the nearest whole 
cent) for the respective kind of tobacco for the immediately preceding 
year on the quantity of tobacco as to which the failure occurs.''.
        (3) Importer assessments to no net cost tobacco account.--
    Section 106B of such Act (7 U.S.C. 1445-2) is amended--
            (A) in subsection (c)(1), by striking ``producers and 
        purchasers'' and inserting ``producers, purchasers, and 
        importers'';
            (B) in subsection (d)(1)--
                (i) by designating the first and second sentences as 
            subparagraphs (A) and (B), respectively; and
                (ii) by adding at the end the following new 
            subparagraph:
    ``(C) The Secretary shall also require (in lieu of any requirement 
under section 106A(d)(1)) that each importer of Flue-cured and Burley 
tobacco shall pay to the Corporation, for deposit in the Account of the 
association, an assessment, as determined under paragraph (2) and 
collected under paragraph (3), with respect to purchases of all such 
kinds of tobacco imported by the importer.'';
            (C) in subsection (d)(2), by adding at the end the following 
        new subparagraph:
    ``(C) The amount of the assessment to be paid by importers shall be 
an amount that is equal to the product obtained by multiplying--
        ``(i) the number of pounds of tobacco that is imported by the 
    importer; by
        ``(ii) the sum of the amount of per pound producer and purchaser 
    assessments that are payable by domestic producers and purchasers of 
    the respective kind of tobacco under this paragraph.'';
            (D) in subsection (d)(3), by adding at the end the following 
        new subparagraph:
    ``(D) If Flue-cured or Burley tobacco is imported by an importer, 
any importer assessment required by subsection (d) shall be collected 
from the importer.''; and
            (E) in subsection (j)(1)--
                (i) by redesignating subparagraphs (B) and (C) as 
            subparagraphs (C) and (D), respectively; and
                (ii) by inserting after subparagraph (A) the following 
            new subparagraph:
    ``(B) Each importer who fails to pay to the Corporation an 
assessment as required by subsection (d) at such time and in such manner 
as may be prescribed by the Secretary, shall be liable, in addition to 
any amount due, to a marketing penalty at a rate equal to 75 percent of 
the average market price (calculated to the nearest whole cent) for the 
respective kind of tobacco for the immediately preceding year on the 
quantity of tobacco as to which the failure occurs.''.
    (c) Fees for Inspecting Imported Tobacco.--The second sentence of 
section 213(d) of the Tobacco Adjustment Act of 1983 (7 U.S.C. 511r(d)) 
is amended by inserting before the period at the end the following: ``, 
and which shall be comparable to fees and charges fixed and collected 
for services provided in connection with tobacco produced in the United 
States''.
    (d) Extension of Quota Reduction Floors.--
        (1) Burley tobacco.--Section 319(c)(3)(C)(ii) of the 
    Agricultural Adjustment Act of 1938 (7 U.S.C. 1314e(c)(3)(C)(ii)) is 
    amended--
            (A) by striking ``1993'' and inserting ``1996''; and
            (B) by inserting before the period at the end the following: 
        ``, except that, in the case of each of the 1995 and 1996 crops 
        of Burley tobacco, the Secretary may waive the requirements of 
        this clause if the Secretary determines that the requirements 
        would likely result in inventories of the producer-owned 
        cooperative marketing associations for Burley tobacco described 
        in section 320B(a)(2) to exceed 150 percent of the reserve stock 
        level for Burley tobacco''.
        (2) Flue-cured tobacco.--Section 317(a)(1)(C)(ii) of such Act (7 
    U.S.C. 1314c(a)(1)(C)(ii)) is amended--
            (A) by striking ``1993'' and inserting ``1996''; and
            (B) by inserting before the period at the end the following: 
        ``, except that, in the case of each of the 1995 and 1996 crops 
        of Flue-cured tobacco, the Secretary may waive the requirements 
        of this clause if the Secretary determines that the requirements 
        would likely result in inventories of the producer-owned 
        cooperative marketing association for Flue-cured tobacco 
        described in section 320B(a)(2) to exceed 150 percent of the 
        reserve stock level for Flue-cured tobacco''.

SEC. 1107. SUGAR PROGRAM.

    (a) In General.--Section 206 of the Agricultural Act of 1949 (7 
U.S.C. 1446g) is amended--
        (1) in the section heading, by striking ``1995'' and inserting 
    ``1997'';
        (2) in subsections (a), (c), (d)(1), and (j), by striking 
    ``1995'' each place it appears and inserting ``1997''; and
        (3) in subsection (i)--
            (A) in paragraph (1), by striking ``equal to'' and all that 
        follows through the period at the end and inserting the 
        following: ``equal to--
            ``(A) in the case of marketings during each of fiscal years 
        1992 through 1994, 1.0 percent of the loan level established 
        under subsection (b) per pound of raw cane sugar (but not more 
        than .18 cents per pound of raw cane sugar), processed by the 
        processor from domestically produced sugarcane or sugarcane 
        molasses, that has been marketed (including the transfer or 
        delivery of the sugar to a refinery for further processing or 
        marketing); and
            ``(B) in the case of marketings during each of fiscal years 
        1995 through 1998, 1.1 percent of the loan level established 
        under subsection (b) per pound of raw cane sugar (but not more 
        than .198 cents per pound of raw cane sugar), processed by the 
        processor from domestically produced sugarcane or sugarcane 
        molasses, that has been marketed (including the transfer or 
        delivery of the sugar to a refinery for further processing or 
        marketing).'';
            (B) in paragraph (2), by striking ``equal to'' and all that 
        follows through the period at the end and inserting the 
        following: ``equal to--
            ``(A) in the case of marketings during each of fiscal years 
        1992 through 1994, 1.0722 percent of the loan level established 
        under subsection (b) per pound of beet sugar (but not more than 
        .193 cents per pound of beet sugar), processed by the processor 
        from domestically produced sugar beets or sugar beet molasses, 
        that has been marketed; and
            ``(B) in the case of marketings during each of fiscal years 
        1995 through 1998, 1.1794 percent of the loan level established 
        under subsection (b) per pound of beet sugar (but not more than 
        .2123 cents per pound of beet sugar), processed by the processor 
        from domestically produced sugar beets or sugar beet molasses, 
        that has been marketed.''; and
            (C) by adding at the end the following new paragraph:
        ``(6) Excess marketings.--In addition to the assessment required 
    under paragraph (1) or (2), a processor who knowingly markets sugar 
    in excess of the allocated allotment of the processor under section 
    359d of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1359dd) 
    shall pay an assessment in an amount that is double the applicable 
    assessment required under paragraph (1) or (2) per pound of sugar 
    marketed.''.
    (b) Provisions Necessary to the Operation of the Program.--Section 
359b of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1359bb) is 
amended--
        (1) in subsection (a)(1), by striking ``1996'' and inserting 
    ``1998''; and
        (2) in subsection (d)--
            (A) by striking paragraph (1) and inserting the following 
        new paragraph:
        ``(1) In general.--During any fiscal year or portion thereof for 
    which marketing allotments have been established, no processor of 
    sugar beets or sugarcane shall market a quantity of sugar in excess 
    of the allocation established for such processor, except to enable 
    another processor to fulfill an allocation established for such 
    other processor or to facilitate the exportation of such sugar.''; 
    and
            (B) in paragraph (3), by inserting ``knowingly'' after 
        ``who'' each place it appears.

SEC. 1108. OILSEEDS PROGRAM.

    Section 205 of the Agricultural Act of 1949 (7 U.S.C. 1446f) is 
amended--
        (1) in subsection (c)--
            (A) in paragraph (1), by inserting after ``$5.02 per 
        bushel'' the following: ``for each of the 1991 through 1993 
        crops and $4.92 per bushel for each of the 1994 through 1997 
        crops''; and
            (B) in paragraph (2), by inserting after ``$0.089 per 
        pound'' the following: ``for each of the 1991 through 1993 crops 
        and $0.087 per pound for each of the 1994 through 1997 crops'';
        (2) in subsection (h), by striking ``mature on the last day of 
    the 9th month following the month the application for the loan is 
    made.'' and inserting the following: ``mature--
        ``(1) in the case of each of the 1991 through 1993 crops, on the 
    last day of the 9th month following the month the application for 
    the loan is made; and
        ``(2) in the case of each of the 1994 through 1997 crops, on the 
    last day of the 9th month following the month the application for 
    the loan is made, except that the loan may not mature later than the 
    last day of the fiscal year in which the application is made.''; and
        (3) in subsection (m), by adding at the end the following new 
    paragraph:
        ``(3) Applicability.--This subsection shall apply only to each 
    of the 1991 through 1993 crops of oilseeds.''.

SEC. 1109. PEANUT PROGRAM.

    (a) In General.--Section 108B of the Agricultural Act of 1949 (7 
U.S.C. 1445c-3) is amended--
        (1) in the section heading, by striking ``1995'' and inserting 
    ``1997'';
        (2) in subsections (a)(1), (a)(2), (b)(1), (g)(1), and (h), by 
    striking ``1995'' each place it appears and inserting ``1997''; and
        (3) in subsection (g)--
            (A) in paragraph (1), by inserting after ``1 percent'' both 
        places it appears the following: ``for each of the 1991 through 
        1993 crops, 1.1 percent for each of the 1994 and 1995 crops, 
        1.15 percent for the 1996 crop, and 1.2 percent for the 1997 
        crop,''; and
            (B) in paragraph (2)(A), by striking clauses (i) and (ii) 
        and inserting the following new clauses:
                ``(i) collect from the producer a marketing assessment 
            equal to the quantity of peanuts acquired multiplied by--

                    ``(I) in the case of each of the 1991 through 1993 
                crops, .5 percent of the applicable national average 
                support rate;
                    ``(II) in the case of each of the 1994 and 1995 
                crops, .55 percent of the applicable national average 
                support rate;
                    ``(III) in the case of the 1996 crop, .6 percent of 
                the applicable national average support rate; and
                    ``(IV) in the case of the 1997 crop, .65 percent of 
                the applicable national average support rate;

                ``(ii) pay, in addition to the amount collected under 
            clause (i), a marketing assessment in an amount equal to the 
            quantity of peanuts acquired multiplied by--

                    ``(I) in the case of each of the 1991 through 1993 
                crops, .5 percent of the applicable national average 
                support rate; and
                    ``(II) in the case of each of the 1994 through 1997 
                crops, .55 percent of the applicable national average 
                support rate; and''.

    (b) Assessment Under Peanut Marketing Agreement.--Section 8b(b)(1) 
of the Agricultural Adjustment Act (7 U.S.C. 608b(b)(1)), reenacted with 
amendments by the Agricultural Marketing Agreement Act of 1937, is 
amended--
        (1) by striking ``and'' at the end of subparagraph (A);
        (2) by striking the period at the end of subparagraph (B) and 
    inserting ``; and''; and
        (3) by adding at the end the following new subparagraph:
        ``(C) any assessment (except with respect to any assessment for 
    the indemnification of losses on rejected peanuts) imposed under the 
    agreement shall--
            ``(i) apply to peanut handlers (as defined by the Secretary) 
        who have not entered into such an agreement with the Secretary 
        in addition to those handlers who have entered into the 
        agreement; and
            ``(ii) be paid to the Secretary.''.
    (c) Provisions Necessary to the Operation of the Program.--Part VI 
of subtitle B of title III of the Agricultural Adjustment Act of 1938 is 
amended--
        (1) in section 358-1 (7 U.S.C. 1358-1)--
            (A) in the section heading, by striking ``1995'' and 
        inserting ``1997''; and
            (B) in subsections (a)(1), (b)(1)(A), (b)(1)(B), (b)(2)(A), 
        (b)(2)(C), (b)(3)(A), and (f), by striking ``1995'' each place 
        it appears and inserting ``1997''; and
        (2) in section 358e (7 U.S.C. 1359a)--
            (A) in the section heading, by striking ``1995'' and 
        inserting ``1997''; and
            (B) in subsection (i), by striking ``1995'' and inserting 
        ``1997''.

SEC. 1110. HONEY PROGRAM.

    Section 207 of the Agricultural Act of 1949 (7 U.S.C. 1446h) is 
amended--
        (1) by striking ``1995'' each place it appears in subsections 
    (a), (c)(1), and (j) and inserting ``1998'';
        (2) in subsection (a), by striking ``than 53.8 cents per 
    pound.'' and inserting ``than--
        ``(1) 53.8 cents per pound for each of the 1991 through 1993 
    crop years;
        ``(2) 50 cents per pound for each of the 1994 and 1995 crop 
    years;
        ``(3) 49 cents per pound for the 1996 crop year;
        ``(4) 48 cents per pound for the 1997 crop year; and
        ``(5) 47 cents per pound for the 1998 crop year.'';
        (3) in subsection (e)(1)--
            (A) by striking ``and'' at the end of subparagraph (C); and
            (B) by striking subparagraph (D) and inserting the following 
        new subparagraphs:
            ``(D) $125,000 in the 1994 crop year;
            ``(E) $100,000 in the 1995 crop year;
            ``(F) $75,000 in the 1996 crop year; and
            ``(G) $50,000 in each of the 1997 and 1998 crop years.''; 
        and
        (4) in subsection (i)(1), by striking ``1995'' and inserting 
    ``1993''.

SEC. 1111. WOOL AND MOHAIR PROGRAM.

    The National Wool Act of 1954 (7 U.S.C. 1781 et seq.) is amended--
        (1) in section 703 (7 U.S.C. 1782), by striking ``1995'' both 
    places it appears in subsections (a) and (b)(2) and inserting 
    ``1997'';
        (2) in section 704 (7 U.S.C. 1783)--
            (A) in subsection (b)(1)--
                (i) by striking ``and'' at the end of subparagraph (C); 
            and
                (ii) by striking subparagraph (D) and inserting the 
            following new subparagraphs:
            ``(D) $125,000 for the 1994 marketing year;
            ``(E) $100,000 for the 1995 marketing year;
            ``(F) $75,000 for the 1996 marketing year; and
            ``(G) $50,000 for the 1997 marketing year.''; and
            (B) in subsection (c), by striking ``through 1995'' and 
        inserting ``and 1992''; and
        (3) in section 706 (7 U.S.C. 1785), by inserting after the 
    second sentence the following new sentence: ``In determining the net 
    sales proceeds and national payment rates for shorn wool and shorn 
    mohair, the Secretary shall not deduct marketing charges for 
    commissions, coring, or grading.''.
                    Subtitle B--Rural Electrification

SEC. 1201. REFINANCING AND PREPAYMENT OF FFB LOANS.

    (a) In General.--Title III of the Rural Electrification Act of 1936 
(7 U.S.C. 931 et seq.) is amended by inserting after section 306B (7 
U.S.C. 936b) the following new section:

``SEC. 306C. REFINANCING AND PREPAYMENT OF FFB LOANS.

    ``(a) In General.--A borrower of a loan made by the Federal 
Financing Bank and guaranteed under section 306 may, at the option of 
the borrower, refinance or prepay the loan or an advance on the loan, or 
any portion of the loan or advance.
    ``(b) Penalty.--
        ``(1) Determination of penalty.--A penalty shall be assessed 
    against a borrower that refinances or prepays a loan or loan 
    advance, or any portion of a loan or advance, under this section. 
    Except as provided in paragraph (2), the penalty shall be equal to 
    the lesser of--
            ``(A) the difference between the outstanding principal 
        balance of the loan being refinanced and the present value of 
        the loan discounted at a rate equal to the then current cost of 
        funds to the Department of the Treasury for obligations of 
        comparable maturity to the loan being refinanced or prepaid;
            ``(B) 100 percent of the amount of interest for 1 year on 
        the outstanding principal balance of the loan or loan advance, 
        or any portion of the loan or advance, being refinanced, 
        multiplied by the ratio that--
                ``(i) the number of quarterly payment dates between the 
            date of the refinancing or prepayment and the maturity date 
            for the loan advance; bears to
                ``(ii) the number of quarterly payment dates between the 
            first quarterly payment date that occurs 12 years after the 
            end of the year in which the amount being refinanced was 
            advanced and the maturity date of the loan advance; and
            ``(C)(i) the present value of 100 percent of the amount of 
        interest for 1 year on the outstanding principal balance of the 
        loan or loan advance, or any portion of the loan or advance, 
        being refinanced or prepaid; plus
            ``(ii) for the interval between the date of the refinancing 
        or prepayment and the first quarterly payment date that occurs 
        12 years after the end of the year in which the amount being 
        refinanced or prepaid was advanced, the present value of the 
        difference between--
                ``(I) each payment scheduled for the interval on the 
            loan amount being refinanced or prepaid; and
                ``(II) the payment amounts that would be required during 
            the interval on the amounts being refinanced or prepaid if 
            the interest rate on the loan were equal to the then current 
            cost of funds to the Department of the Treasury for 
            obligations of comparable maturity to the loan being 
            refinanced or prepaid.
        ``(2) Limitation.--
            ``(A) In general.--Except as provided in subparagraph (B), 
        the penalty provided by paragraph (1)(A) shall be required for 
        refinancing or prepayment under this section.
            ``(B) Exception.--In the case of a loan advanced under an 
        agreement that permits the refinancing or prepayment of the loan 
        advance based on the payment of 1 year of interest on the 
        outstanding principal balance of the loan advance, a borrower 
        may, in lieu of the penalty required by paragraph (1)(A), pay a 
        penalty as provided by--
                ``(i) paragraph (1)(B), if the loan advance has reached 
            the 12-year maturity required under the loan agreement for 
            the refinancing or prepayment; or
                ``(ii) paragraph (1)(C), if the loan advance has not 
            reached the 12-year maturity required under the loan 
            agreement for the refinancing or prepayment.
        ``(3) Financing of penalty.--
            ``(A) In general.--In the case of a refinancing under this 
        section, a borrower may, at the option of the borrower, meet the 
        penalty requirements of paragraph (1) by--
                ``(i) making a payment in the amount of the required 
            penalty at the time of the refinancing; or
                ``(ii) increasing the outstanding principal balance of 
            the loan advance guaranteed by the Administrator that is 
            being refinanced under this section by the amount of the 
            penalty.
            ``(B) Increased principal.--If a borrower meets the penalty 
        requirements of paragraph (1) by increasing the outstanding 
        principal balance of the loan advance that is being refinanced, 
        the borrower shall make a payment at the time of the refinancing 
        equal to 2.5 percent of the amount of the penalty that is added 
        to the outstanding principal balance of the loan.
    ``(c) Loan Terms and Conditions After Refinancing.--
        ``(1) In general.--On the payment of a penalty as provided by 
    subsection (b), the loan or loan advance, or any portion of the loan 
    or advance, shall be refinanced at the interest rate described in 
    paragraph (2) for a term selected by the borrower pursuant to 
    paragraph (3), except that this paragraph shall not apply if the 
    loan advance, or any portion of the advance, is prepaid by the 
    borrower.
        ``(2) Interest rate.--The interest rate on a loan refinanced 
    under this section shall be determined to be equal to the then 
    current cost of funds to the Department of the Treasury for 
    obligations of comparable maturity to a term selected by the 
    borrower pursuant to paragraph (3).
        ``(3) Loan term.--Subject to paragraph (4), the borrower of a 
    loan that is refinanced under this section--
            ``(A) shall select the term for which an interest rate shall 
        be determined pursuant to paragraph (2); and
            ``(B) at the end of the term (and any succeeding term 
        selected by the borrower under this paragraph), may renew the 
        loan for another term selected by the borrower.
        ``(4) Maximum term.--The borrower may not select a term pursuant 
    to paragraph (3) that ends after the maturity date set for the loan 
    before the refinancing of the loan under this section.
        ``(5) Existing loans.--In the case of the refinancing of a loan 
    of a borrower pursuant to this section and the inclusion of a 
    penalty in the outstanding principal balance of the refinanced loan 
    pursuant to subsection (b)(3)--
            ``(A) the refinancing and inclusion of the penalty shall not 
        be subject to appropriations or limited by the amount provided 
        during a fiscal year for new loans, loan guarantees, or other 
        credit activity;
            ``(B) the request of the borrower for the refinancing under 
        this section may not be denied or delayed; and
            ``(C) the borrower may not be limited in the selection of 
        any refinancing or prepayment option provided by this section to 
        the borrower.''.
    (b) Regulations.--Not later than 45 days after the date of enactment 
of this section, the Administrator of the Rural Electrification 
Administration shall issue interim final regulations to carry out the 
amendment made by subsection (a).
                     Subtitle C--Agricultural Trade

SEC. 1301. ACREAGE REDUCTION REQUIREMENTS.

    (a) In General.--Section 1104 of the Omnibus Budget Reconciliation 
Act of 1990 (7 U.S.C. 1445b-3a note) is amended--
        (1) in subsection (a), by striking paragraph (2) and inserting 
    the following new paragraph:
        ``(2) corn under which the acreage planted to corn for harvest 
    on a farm would be limited to the corn crop acreage base for the 
    farm for the crop reduced by not less than 7\1/2\ percent.''; and
        (2) in subsection (b)(2), by striking ``grain sorghum, and 
    barley,''.
    (b) Readjustment of Support Levels.--Section 1302 of such Act (7 
U.S.C. 1421 note) is amended--
        (1) in subsection (b)--
            (A) by striking paragraph (1); and
            (B) by redesignating paragraphs (2) and (3) as paragraphs 
        (1) and (2), respectively;
        (2) in subsection (c), by striking ``and other programs''; and
        (3) in subsection (d)--
            (A) in paragraph (1)--
                (i) by striking subparagraph (A); and
                (ii) by redesignating subparagraphs (B) and (C) as 
            subparagraphs (A) and (B), respectively;
            (B) in paragraph (2), by striking ``(A), (B), and (C)'' and 
        inserting ``(A) and (B)''; and
            (C) in paragraph (3)--
                (i) by striking ``measures specified in subparagraph (A) 
            of paragraph (1) and''; and
                (ii) by striking ``(B) or (C)'' and inserting ``(A) or 
            (B)''.

SEC. 1302. MARKET PROMOTION PROGRAM.

    (a) Reduction of Funding Level.--Section 211(c)(1) of the 
Agricultural Trade Act of 1978 (7 U.S.C. 5641(c)(1)) is amended by 
striking ``through 1995'' and inserting ``through 1993, and not less 
than $110,000,000 for each of the fiscal years 1994 through 1997,''.
    (b) Secretarial Actions To Achieve Savings.--In order to enable the 
Secretary of Agriculture to achieve the savings required in the market 
promotion program established by section 203 of the Agricultural Trade 
Act of 1978 (7 U.S.C. 5623) as a result of the amendments made by this 
section:
        (1) Unfair trade practices.--Paragraph (2) of section 203(c) of 
    such Act is amended to read as follows:
        ``(2) Unfair trade practices.--
            ``(A) Requirement.--Except as provided in subparagraph (B), 
        the Secretary shall provide assistance under this section only 
        to counter or offset the adverse effects of a subsidy, import 
        quota, or other unfair trade practice of a foreign country.
            ``(B) Exception.--The Secretary shall waive the requirements 
        of this paragraph in the case of activities conducted by small 
        entities operating through the regional State-related 
        organizations.''.
        (2) Guidelines.--The Secretary of Agriculture should implement 
    changes in the market promotion program established by section 203 
    of such Act, beginning with fiscal year 1994, in order to improve 
    the effectiveness of the program and to meet the following 
    objectives:
            (A) Priority.--In providing assistance for branded 
        promotion, the Secretary should give priority to small-sized 
        entities.
            (B) Graduation.--The Secretary should not provide assistance 
        under the program to promote a specific branded product in a 
        single market for more than 5 years unless the Secretary 
        determines that further assistance is necessary in order to meet 
        the objectives of the program.
            (C) Contribution level.--
                (i) In general.--The Secretary should require a minimum 
            contribution level of 10 percent from an eligible trade 
            organization that receives assistance for nonbranded 
            promotion.
                (ii) Increases in contribution level.--The Secretary may 
            increase the contribution level in any subsequent year that 
            an eligible trade organization receives assistance for 
            nonbranded promotion.
            (D) Additionality.--The Secretary should require each 
        participant in the program to certify that any Federal funds 
        received supplement, but do not supplant, private or third party 
        participant funds or other contributions to program activities.
            (E) Independent audits.--If as a result of an evaluation or 
        audit of activities of a participant under the program, the 
        Secretary determines that a further review is justified in order 
        to ensure compliance with the requirements of the program, the 
        Secretary should require the participant to contract for an 
        independent audit of the program activities, including 
        activities of any subcontractor.
        (3) Tobacco.--No funds made available under the market promotion 
    program may be used for activities to develop, maintain, or expand 
    foreign markets for tobacco.
    (c) Regulations.--Not later than 90 days after the date of enactment 
of this Act, the Secretary of Agriculture shall issue regulations to 
implement this section and the amendments made by this section.
                        Subtitle D--Miscellaneous

SEC. 1401. ADMISSION, ENTRANCE, AND RECREATION FEES.

    (a) Definitions.--As used in this section:
        (1) Area of concentrated public use.--The term ``area of 
    concentrated public use'' means an area administered by the 
    Secretary that meets each of the following criteria:
            (A) The area is managed primarily for outdoor recreation 
        purposes.
            (B) Facilities and services necessary to accommodate heavy 
        public use are provided in the area.
            (C) The area contains at least 1 major recreation 
        attraction.
            (D) Public access to the area is provided in such a manner 
        that admission fees can be efficiently collected at 1 or more 
        centralized locations.
        (2) Boat launching facility.--The term ``boat launching 
    facility'' includes any boat launching facility, regardless of 
    whether specialized facilities or services, such as mechanical or 
    hydraulic boat lifts or facilities, are provided.
        (3) Campground.--The term ``campground'' means any campground 
    where a majority of the following amenities are provided, as 
    determined by the Secretary:
            (A) Tent or trailer spaces.
            (B) Drinking water.
            (C) An access road.
            (D) Refuse containers.
            (E) Toilet facilities.
            (F) The personal collection of recreation use fees by an 
        employee or agent of the Secretary.
            (G) Reasonable visitor protection.
            (H) If campfires are permitted in the campground, simple 
        devices for containing the fires.
        (4) Secretary.--The term ``Secretary'' means the Secretary of 
    Agriculture.
    (b) Authority To Impose Fees.--The Secretary may charge--
        (1) admission or entrance fees at national monuments, national 
    volcanic monuments, national scenic areas, and areas of concentrated 
    public use administered by the Secretary; and
        (2) recreation use fees at lands administered by the Secretary 
    in connection with the use of specialized outdoor recreation sites, 
    equipment, services, and facilities, including visitors' centers, 
    picnic tables, boat launching facilities, and campgrounds.
    (c) Amount of Fees.--The amount of the admission, entrance, and 
recreation fees authorized to be imposed under this section shall be 
determined by the Secretary.
SEC. 1402. ENVIRONMENTAL CONSERVATION ACREAGE RESERVE PROGRAM 
AMENDMENTS.
    (a) Environmental Conservation Acreage Reserve Program.--Section 
1230(b) of the Food Security Act of 1985 (16 U.S.C. 3830(b)) is amended 
by striking ``to place in'' and all that follows through ``acres''.
    (b) Conservation Reserve Program.--Section 1231(d) of such Act (16 
U.S.C. 3831(d)) is amended--
        (1) by striking ``may'' and inserting ``shall'';
        (2) by striking ``the amount of acres specified in section 
    1230(b)'' and inserting ``a total of 38,000,000 acres during the 
    1986 through 1995 calendar years''; and
        (3) by striking ``each of calendar years 1994 and 1995'' and 
    inserting ``the 1995 calendar year''.
    (c) Wetlands Reserve Program.--Section 1237 of such Act (16 U.S.C. 
3837) is amended--
        (1) by striking subsection (b) and inserting the following new 
    subsection:
    ``(b) Minimum Enrollment.--The Secretary shall enroll into the 
wetlands reserve program--
        ``(1) a total of not less than 330,000 acres by the end of the 
    1995 calendar year; and
        ``(2) a total of not less than 975,000 acres during the 1991 
    through 2000 calendar years.''; and
        (2) in subsection (c), by striking ``1995'' and inserting 
    ``2000''.

SEC. 1403. FEDERAL CROP INSURANCE.

    (a) Actuarial Soundness.--Section 506 of the Federal Crop Insurance 
Act (7 U.S.C. 1506) is amended by adding at the end the following new 
subsection:
    ``(n) Actuarial Soundness.--The Corporation shall take such actions 
as are necessary to improve the actuarial soundness of Federal 
multiperil crop insurance coverage made available under this title to 
achieve, on and after October 1, 1995, an overall projected loss ratio 
of not greater than 1.1, including--
        ``(1) instituting appropriate requirements for documentation of 
    the actual production history of insured producers to establish 
    recorded or appraised yields for Federal crop insurance coverage 
    that more accurately reflect the associated actuarial risk, except 
    that the Corporation may not carry out this paragraph in a manner 
    that would prevent beginning farmers from obtaining adequate Federal 
    crop insurance, as determined by the Corporation;
        ``(2) establishing in counties, to the extent practicable, a 
    crop insurance option based on area yields in a manner that allows 
    an insured producer to qualify for an indemnity if a loss has 
    occurred in a specified area in which the farm of the insured 
    producer is located;
        ``(3) establishing a database that contains the social security 
    account and employee identification numbers of participating 
    producers and using the numbers to identify insured producers who 
    are high risk for actuarial purposes and insured producers who have 
    not documented at least 4 years of production history, to assess the 
    performance of insurance providers, and for other purposes permitted 
    by law; and
        ``(4) taking any other measures authorized by law to improve the 
    actuarial soundness of the Federal crop insurance program while 
    maintaining fairness and effective coverage for agricultural 
    producers.''.
    (b) Conforming Amendments.--
        (1) Reinsurance.--Section 508(h) of such Act (7 U.S.C. 1508(h)) 
    is amended by striking the fifth sentence and inserting the 
    following new sentence: ``The Corporation shall also pay operating 
    and administrative costs to insurers of policies on which the 
    Corporation provides reinsurance in an amount determined by the 
    Corporation.''.
        (2) Area yield plan.--Section 508 of such Act (7 U.S.C. 1508) is 
    amended by adding at the end the following new subsection:
    ``(n) Area Yield Plan.--
        ``(1) In general.--Notwithstanding any other provision of this 
    title, the Corporation may offer, only as an option to individual 
    crop insurance coverage available under this Act, a crop insurance 
    plan based on an area yield that allows an insured producer to 
    qualify for an indemnity if a loss has occurred in an area, as 
    specified by the Corporation, in which the farm of the producer is 
    located.
        ``(2) Level of coverage.--Under a plan offered under paragraph 
    (1), an insured producer shall be allowed to select the level of 
    production at which an indemnity will be paid consistent with terms 
    and conditions established by the Corporation.''.
        (3) Yield coverage.--Section 508A of such Act (7 U.S.C. 1508a) 
    is amended--
            (A) in subsection (a)(1), by striking ``may'' and inserting 
        ``shall''; and
            (B) in subsection (b)--
                (i) in paragraph (1)(A)--

                    (I) by striking ``A crop insurance contract'' and 
                all that follows through ``producer--'' and inserting 
                ``Under regulations issued by the Corporation, a crop 
                insurance contract offered under this title to an 
                eligible insured producer of a commodity with respect to 
                which the Corporation provides crop insurance coverage 
                shall make available to the producer either--'';
                    (II) by striking ``or'' at the end of clause (i);
                    (III) in clause (ii)--

                        (aa) by striking ``5'' and inserting ``4 
                    building to 10''; and
                        (bb) by striking the period at the end and 
                    inserting ``; or''; and

                    (IV) by adding at the end the following new clause:

                ``(iii) yield coverage based on--

                    ``(I) not less than 65 percent of the transitional 
                yield of the producer (adjusted to reflect actual 
                experience), as specified in regulations issued by the 
                Corporation based on production history requirements; or
                    ``(II) the area yield under section 508(n) for the 
                crop established under the program for the commodity 
                involved.'';

                (ii) in paragraph (1)(B)--

                    (I) by striking ``two'' and inserting ``3''; and
                    (II) by inserting after ``subparagraph (A)'' the 
                following: ``, where available (as determined by the 
                Corporation),'';

                (iii) in paragraph (2)--

                    (I) by striking ``5'' and inserting ``4 building to 
                10''; and
                    (II) by inserting after ``previous crops,'' the 
                following: ``not less than 65 percent of the 
                transitional yield of the producer (adjusted to reflect 
                actual experience), or the area yield,''; and

                (iv) in paragraph (3)(A)(i), by inserting after ``farm 
            program yield'' the following: ``, not less than 65 percent 
            of the transitional yield of the producer (adjusted to 
            reflect actual experience), as specified in regulations 
            issued by the Corporation based on production history 
            requirements, or the area yield under section 508(n), 
            whichever is applicable,''.
    (c) Effective Date.--
        (1) In general.--Except as provided in paragraph (2), this 
    section and the amendments made by this section shall become 
    effective on October 1, 1993.
        (2) Regulations.--Not later than 30 days after the date of 
    enactment of this Act, the Secretary of Agriculture shall publish, 
    for public comment, proposed regulations to implement the amendments 
    made by this section.
                   TITLE II--ARMED SERVICES PROVISIONS
SEC. 2001. LIMITATION ON COST-OF-LIVING ADJUSTMENTS FOR MILITARY 
RETIREES.
    Section 1401a(b) of title 10, United States Code, is amended--
        (1) in paragraph (2), by striking out ``The Secretary'' and 
    inserting in lieu thereof ``Except as provided in paragraph (6), the 
    Secretary''; and
        (2) by adding at the end the following new paragraph:
        ``(6) Special rules for paragraph (2) for fiscal years 1994 
    through 1998.--
            ``(A) Fiscal year 1994.--In the case of an increase in the 
        retired pay of a member or former member referred to in 
        paragraph (2) that, pursuant to paragraph (1), becomes effective 
        on December 1, 1993, the initial month for which such increase 
        is payable as part of such retired pay shall (notwithstanding 
        such December 1 effective date) be March 1994.
            ``(B) Fiscal years 1995 through 1998.--In the case of an 
        increase in retired pay of a member or former member referred to 
        in paragraph (2) that, pursuant to paragraph (1), becomes 
        effective on December 1 of 1994, 1995, 1996, or 1997, the 
        initial month for which such increase is payable as part of such 
        retired pay shall (notwithstanding such December 1 effective 
        date) be September of the following year.
            ``(C) Inapplicability to disability retirees.--Subparagraphs 
        (A) and (B) do not apply with respect to the retired pay of a 
        member retired under chapter 61 of this title.''.
                TITLE III--BANKING AND HOUSING PROVISIONS

SEC. 3001. NATIONAL DEPOSITOR PREFERENCE.

    (a) In General.--Section 11(d)(11) of the Federal Deposit Insurance 
Act (12 U.S.C. 1821(d)(11)) is amended to read as follows:
        ``(11) Depositor preference.--
            ``(A) In general.--Subject to section 5(e)(2)(C), amounts 
        realized from the liquidation or other resolution of any insured 
        depository institution by any receiver appointed for such 
        institution shall be distributed to pay claims (other than 
        secured claims to the extent of any such security) in the 
        following order of priority:
                ``(i) Administrative expenses of the receiver.
                ``(ii) Any deposit liability of the institution.
                ``(iii) Any other general or senior liability of the 
            institution (which is not a liability described in clause 
            (iv) or (v)).
                ``(iv) Any obligation subordinated to depositors or 
            general creditors (which is not an obligation described in 
            clause (v)).
                ``(v) Any obligation to shareholders or members arising 
            as a result of their status as shareholders or members 
            (including any depository institution holding company or any 
            shareholder or creditor of such company).
            ``(B) Effect on state law.--
                ``(i) In general.--The provisions of subparagraph (A) 
            shall not supersede the law of any State except to the 
            extent such law is inconsistent with the provisions of such 
            subparagraph, and then only to the extent of the 
            inconsistency.
                ``(ii) Procedure for determination of inconsistency.--
            Upon the Corporation's own motion or upon the request of any 
            person with a claim described in subparagraph (A) or any 
            State which is submitted to the Corporation in accordance 
            with procedures which the Corporation shall prescribe, the 
            Corporation shall determine whether any provision of the law 
            of any State is inconsistent with any provision of 
            subparagraph (A) and the extent of any such inconsistency.
                ``(iii) Judicial review.--The final determination of the 
            Corporation under clause (ii) shall be subject to judicial 
            review under chapter 7 of title 5, United States Code.
            ``(C) Accounting report.--Any distribution by the 
        Corporation in connection with any claim described in 
        subparagraph (A)(v) shall be accompanied by the accounting 
        report required under paragraph (15)(B).''.
    (b) Technical and Conforming Amendments.--
        (1) Section 11(c)(13) of the Federal Deposit Insurance Act (12 
    U.S.C. 1821(c)(13)) is amended--
            (A) in subparagraph (A), by striking ``subject to 
        subparagraph (B),'';
            (B) by inserting ``and'' after the semicolon at the end of 
        subparagraph (A);
            (C) by striking subparagraph (B); and
            (D) by redesignating subparagraph (C) as subparagraph (B).
        (2) Section 11(g)(4) of the Federal Deposit Insurance Act (12 
    U.S.C. 1921(g)(4)) is amended by striking ``If the Corporation'' and 
    inserting ``Subject to subsection (d)(11), if the Corporation''.
    (c) Effective Date.--The amendments made by this section shall apply 
with respect to insured depository institutions for which a receiver is 
appointed after the date of the enactment of this Act.

SEC. 3002. TRANSFER OF FEDERAL RESERVE SURPLUSES.

    (a) In General.--The 1st undesignated paragraph of section 7 of the 
Federal Reserve Act (12 U.S.C. 289) is amended to read as follows:
    ``(a) Dividends and Surplus Funds of Reserve Banks.--
        ``(1) Stockholder dividends.--
            ``(A) In general.--After all necessary expenses of a Federal 
        reserve bank have been paid or provided for, the stockholders of 
        the bank shall be entitled to receive an annual dividend of 6 
        percent on paid-in capital stock.
            ``(B) Dividend cumulative.--The entitlement to dividends 
        under subparagraph shall be cumulative.
        ``(2) Deposit of net earnings in surplus fund.--That portion of 
    net earnings of each Federal reserve bank which remains after 
    dividend claims under subparagraph (A) have been fully met shall be 
    deposited in the surplus fund of the bank.
        ``(3) Payment to treasury.--During fiscal years 1997 and 1998, 
    any amount in the surplus fund of any Federal reserve bank in excess 
    of the amount equal to 3 percent of the total paid-in capital and 
    surplus of the member banks of such bank shall be transferred to the 
    Board for transfer to the Secretary of the Treasury for deposit in 
    the general fund of the Treasury.''.
    (b) Additional Transfers for Fiscal Years 1997 and 1998.--
        (1) In general.--In addition to the amounts required to be 
    transferred from the surplus funds of the Federal reserve banks 
    pursuant to section 7(a)(3) of the Federal Reserve Act, the Federal 
    reserve banks shall transfer from such surplus funds to the Board of 
    Governors of the Federal Reserve System for transfer to the 
    Secretary of the Treasury for deposit in the general fund of the 
    Treasury, a total amount of $106,000,000 in fiscal year 1997 and a 
    total amount of $107,000,000 in fiscal year 1998.
        (2) Allocation by fed.--Of the total amount required to be paid 
    by the Federal reserve banks under paragraph (1) for fiscal year 
    1997 or 1998, the Board of Governors of the Federal Reserve System 
    shall determine the amount each such bank shall pay in such fiscal 
    year.
        (3) Replenishment of surplus fund prohibited.--No Federal 
    reserve bank may replenish such bank's surplus fund by the amount of 
    any transfer by such bank under paragraph (1) during fiscal years 
    1997 and 1998.
    (c) Technical and Conforming Amendments.--
        (1) The penultimate undesignated paragraph of section 7 of the 
    Federal Reserve Act (12 U.S.C. 290) is amended by striking ``The net 
    earnings derived'' and inserting ``(b) Use of Earnings Transferred 
    to the Treasury.--The net earnings derived''.
        (2) The last undesignated paragraph of section 7 of the Federal 
    Reserve Act (12 U.S.C. 531) is amended by striking ``Federal reserve 
    banks'' and inserting ``(c) Exemption From Taxation.--Federal 
    reserve banks''.
SEC. 3003. USE OF RETURN DATA FOR INCOME VERIFICATION UNDER CERTAIN 
HOUSING ASSISTANCE PROGRAMS.
    Section 904 of the Stewart B. McKinney Homeless Assistance 
Amendments Act of 1988 (42 U.S.C. 3544) is amended as follows:
        (1) Definition.--In subsection (a), by adding at the end the 
    following:
        ``(4) Program of the department of housing and urban 
    development.--The term `program of the Department of Housing and 
    Urban Development' includes Indian housing programs assisted under 
    title II of the United States Housing Act of 1937.''.
        (2) Consent forms.--In subsection (b)--
            (A) in paragraph (1), by striking ``and'' at the end;
            (B) in paragraph (2), by striking the period at the end and 
        inserting ``; and'';
            (C) by inserting after paragraph (2) the following new 
        paragraph:
        ``(3) sign a consent form approved by the Secretary authorizing 
    the Secretary to request the Commissioner of Social Security and the 
    Secretary of the Treasury to release information pursuant to section 
    6103(l)(7)(D)(ix) of the Internal Revenue Code of 1986 with respect 
    to such applicant or participant for the sole purpose of the 
    Secretary verifying income information pertinent to the applicant's 
    or participant's eligibility or level of benefits.''; and
            (D) in the last sentence, by striking ``This'' and inserting 
        the following: ``Except as provided in this subsection, this''.
        (3) Applicant, participant, and public housing agency 
    protections.--In subsection (c)(2)--
            (A) in subparagraph (A)--
                (i) in the matter preceding clause (i)--

                    (I) by inserting after ``compensation law'' the 
                following: ``or pursuant to section 6103(l)(7)(D)(ix) of 
                the Internal Revenue Code of 1986 from the Commissioner 
                of Social Security or the Secretary of the Treasury''; 
                and
                    (II) by inserting ``(in the case of information 
                obtained pursuant to such section 303(i))'' before 
                ``representatives''; and

                (ii) in clause (ii), by inserting ``or public housing 
            agency'' after ``owner'' each place it appears; and
            (B) in subparagraph (B), by inserting after ``wages'' each 
        place it appears the following: ``, other earnings or income,''.
        (4) Penalty.--In subsection (c)(3)--
            (A) in subparagraph (A), by inserting ``or section 
        6103(l)(7)(D)(ix) of the Internal Revenue Code of 1986 without 
        consent pursuant to subsection (b) of this section or'' after 
        ``Social Security Act''; and
            (B) in the first sentence of subparagraph (B)--
                (i) by striking clause (i) and inserting the following: 
            ``(i) a negligent or knowing disclosure of information 
            referred to in this section, section 303(i) of the Social 
            Security Act, or section 6103(l)(7)(D)(ix) of the Internal 
            Revenue Code of 1986 about such person by an officer or 
            employee of any public housing agency or owner (or employee 
            thereof), which disclosure is not authorized by this 
            section, such section 303(i), such section 
            6103(l)(7)(D)(ix), or any regulation implementing this 
            section, such section 303(i), or such section 
            6103(l)(7)(D)(ix), or for which consent, pursuant to 
            subsection (b) of this section, has not been granted, or''; 
            and
                (ii) in clause (ii), by inserting ``such section 
            6103(l)(7)(D)(ix),'' after ``303(i),''.
        (5) Conforming amendment.--The heading of subsection (c) of 
    section 904 of the Stewart B. McKinney Homeless Assistance 
    Amendments Act of 1988 is amended by striking ``State Employment''.

SEC. 3004. GNMA REMIC GUARANTEE FEES.

    Section 306(g)(3) of the National Housing Act (12 U.S.C. 1721(g)(3)) 
is amended by adding at the end the following new subparagraph:
    ``(E)(i) Notwithstanding subparagraphs (A) through (D), fees charged 
for the guarantee of, or commitment to guarantee, multiclass securities 
backed by a trust or pool of securities or notes guaranteed by the 
Association under this subsection, and other related fees shall be 
charged by the Association in an amount the Association deems 
appropriate. The Association shall take such action as may be necessary 
to reasonably assure that such portion of the benefit, resulting from 
the Association's multiclass securities program, as the Association 
determines is appropriate accrues to mortgagors who execute eligible 
mortgages after the date of the enactment of this subparagraph.
    ``(ii) The Association shall provide for the initial implementation 
of the program for which fees are charged under the first sentence of 
clause (i) by notice published in the Federal Register. The notice shall 
be effective upon publication and shall provide an opportunity for 
public comment. Not later than 12 months after publication of the 
notice, the Association shall issue regulations for such program based 
on the notice, comments received, and the experience of the Association 
in carrying out the program during such period.
    ``(iii) The Association shall consult with persons or entities in 
such manner as the Association deems appropriate to ensure the efficient 
commencement and operation of the multiclass securities program.
    ``(iv) No State or local law, and no Federal law (except Federal law 
enacted expressly in limitation of this clause after the effective date 
of this subparagraph) shall preclude or limit the exercise by the 
Association of its power to contract with persons or entities, and its 
rights to enforce such contracts, for the purpose of ensuring the 
efficient commencement and continued operation of the multiclass 
securities program.''.

SEC. 3005. MUTUAL MORTGAGE INSURANCE FUND PREMIUMS.

    To improve the actuarial soundness of the Mutual Mortgage Insurance 
Fund under the National Housing Act, the Secretary of Housing and Urban 
Development shall increase the rate at which the Secretary earns the 
single premium payment collected at the time of insurance of a mortgage 
that is an obligation of such Fund (with respect to the rate in effect 
on the date of the enactment of this Act). In establishing such 
increased rate, the Secretary shall consider any current audit findings 
and reserve analyses and information regarding the expected average 
duration of mortgages that are obligations of such Fund and may consider 
any other information that the Secretary determines to be appropriate.
               TITLE IV--STUDENT LOAN AND ERISA PROVISIONS

SEC. 4001. TABLE OF CONTENTS.

    The table of contents for this title is as follows:

               TITLE IV--STUDENT LOAN AND ERISA PROVISIONS

 Sec. 4001. Table of contents.

               Subtitle A--Direct Student Loan Provisions

Sec. 4011. Short title; references.

             Chapter 1--Federal Direct Student Loan Program

Sec. 4021. Federal direct student loan program.

  Chapter 2--Conforming Amendments to the Higher Education Act of 1965

Sec. 4041. Preserving loan access.
Sec. 4042. Guaranty agency reserves.
Sec. 4043. Terms of loans.
Sec. 4044. Assignment of loans.
Sec. 4045. Termination of guaranty agency agreements; assumption of 
          guaranty agency functions by the Secretary.
Sec. 4046. Consolidation loans.
Sec. 4047. Consolidation of programs.

      Subtitle B--Additional Savings from the Student Loan Programs

Sec. 4101. Reduction of borrower interest rates.
Sec. 4102. Reduction in loan fees paid by students.
Sec. 4103. Loan fees from lenders.
Sec. 4104. Offset fee.
Sec. 4105. Elimination of tax exempt floor.
Sec. 4106. Reduction in interest rate for consolidation loans; rebate 
          fee.
Sec. 4107. Reinsurance fees and administrative cost allowance.
Sec. 4108. Risk sharing.
Sec. 4109. Plus loan disbursements.
Sec. 4110. Secretary's equitable share.
Sec. 4111. Reduction in the special allowance payment.
Sec. 4112. Supplemental preclaims assistance.

                   Subtitle C--Cost Sharing by States

Sec. 4201. Cost sharing by States.

                     Subtitle D--Group Health Plans

Sec. 4301. Standards for group health plan coverage.
               Subtitle A--Direct Student Loan Provisions

SEC. 4011. SHORT TITLE; REFERENCES.

    (a) Short Title.--This subtitle may be cited as the ``Student Loan 
Reform Act of 1993''.
    (b) References.--References in this subtitle and subtitles B and C 
to ``the Act'' are references to the Higher Education Act of 1965 (20 
U.S.C. 1001 et seq.).

             CHAPTER 1--FEDERAL DIRECT STUDENT LOAN PROGRAM

SEC. 4021. FEDERAL DIRECT STUDENT LOAN PROGRAM.

    Part D of title IV (20 U.S.C. 1087a) is amended to read as follows:

              ``PART D--FEDERAL DIRECT STUDENT LOAN PROGRAM

``SEC. 451. PROGRAM AUTHORITY.

    There are hereby made available, in accordance with the provisions 
of this part, such sums as may be necessary to make loans to all 
eligible students (and the eligible parents of such students) in 
attendance at participating institutions of higher education selected by 
the Secretary, to enable such students to pursue their courses of study 
at such institutions during the period beginning July 1, 1994. Such 
loans shall be made by participating institutions, or consortia thereof, 
that have agreements with the Secretary to originate loans, or by 
alternative originators designated by the Secretary to make loans for 
students in attendance at participating institutions (and their 
parents).
``SEC. 452. FUNDS FOR ORIGINATION OF DIRECT STUDENT LOANS.
    ``(a) In General.--The Secretary shall provide, on the basis of the 
need and the eligibility of students at each participating institution, 
and parents of such students, for such loans, funds for student and 
parent loans under this part--
        ``(1) directly to an institution of higher education that has an 
    agreement with the Secretary under section 454(a) to participate in 
    the direct student loan programs under this part and that also has 
    an agreement with the Secretary under section 454(b) to originate 
    loans under this part; or
        ``(2) through an alternative originator designated by the 
    Secretary to students (and parents of students) attending 
    institutions of higher education that have an agreement with the 
    Secretary under section 454(a) but that do not have an agreement 
    with the Secretary under section 454(b).
    ``(b) Fees for Origination Services.--
        ``(1) Fees for institutions.--The Secretary shall pay fees to 
    institutions of higher education (or a consortium of such 
    institutions) with agreements under section 454(b), in an amount 
    established by the Secretary, to assist in meeting the costs of loan 
    origination. Such fees--
            ``(A) shall be paid by the Secretary based on all the loans 
        made under this part to a particular borrower in the same 
        academic year;
            ``(B) shall be subject to a sliding scale that decreases the 
        per borrower amount of such fees as the number of borrowers 
        increases; and
            ``(C)(i) for academic year 1994-1995, shall not exceed a 
        program-wide average of $10 per borrower for all the loans made 
        under this part to such borrower in the same academic year; and
            ``(ii) for succeeding academic years, shall not exceed such 
        average fee as the Secretary shall establish pursuant to 
        regulations.
        ``(2) Fees for alternative originators.--The Secretary shall pay 
    fees for loan origination services to alternative originators of 
    loans made under this part in an amount established by the Secretary 
    in accordance with the terms of the contract described in section 
    456(b) between the Secretary and each such alternative originator.
    ``(c) No Entitlement To Participate or Originate.--No institution of 
higher education shall have a right to participate in the programs 
authorized by this part, to originate loans, or to perform any program 
function under this part. Nothing in this subsection shall be construed 
so as to limit the entitlement of an eligible student attending a 
participating institution (or the eligible parent of such student) to 
borrow under this part.
    ``(d) Delivery of Loan Funds.--Loan funds shall be paid and 
delivered to an institution by the Secretary prior to the beginning of 
the payment period established by the Secretary in a manner that is 
consistent with payment and delivery of basic grants under subpart 1 of 
part A of this title.
``SEC. 453. SELECTION OF INSTITUTIONS FOR PARTICIPATION AND ORIGINATION.
    ``(a) Phase-In of Program.--
        ``(1) General authority.--The Secretary shall enter into 
    agreements pursuant to section 454(a) with institutions of higher 
    education to participate in the direct student loan program under 
    this part, and agreements pursuant to section 454(b) with 
    institutions of higher education, or consortia thereof, to originate 
    loans in such program, for academic years beginning on or after July 
    1, 1994. Alternative origination services, through which an entity 
    other than the participating institution at which the student is in 
    attendance originates the loan, shall be provided by the Secretary, 
    through 1 or more contracts under section 456(b) or such other means 
    as the Secretary may provide, for students attending participating 
    institutions that do not originate direct student loans under this 
    part. Such agreements for the academic year 1994-1995 shall, to the 
    extent feasible, be entered into not later than January 1, 1994.
        ``(2) Transition provisions.--In order to ensure an expeditious 
    but orderly transition from the loan programs under part B of this 
    title to the direct student loan program under this part, the 
    Secretary shall, in the exercise of the Secretary's discretion, 
    determine the number of institutions with which the Secretary shall 
    enter into agreements under subsections (a) and (b) of section 454 
    for any academic year, except that the Secretary shall exercise such 
    discretion so as to achieve the following goals:
            ``(A) for academic year 1994-1995, loans made under this 
        part shall represent 5 percent of the new student loan volume 
        for such year;
            ``(B) for academic year 1995-1996, loans made under this 
        part shall represent 40 percent of the new student loan volume 
        for such year;
            ``(C) for academic years 1996-1997 and 1997-1998, loans made 
        under this part shall represent 50 percent of the new student 
        loan volume for such years; and
            ``(D) for the academic year that begins in fiscal year 1998, 
        loans made under this part shall represent 60 percent of the new 
        student loan volume for such year.
        ``(3) Exception.--The Secretary may exceed the percentage goals 
    described in subparagraphs (C) or (D) of paragraph (2) if the 
    Secretary determines that a higher percentage is warranted by the 
    number of institutions of higher education that desire to 
    participate in the program under this part and that meet the 
    eligibility requirements for such participation.
        ``(4) New student loan volume.--For the purpose of this 
    subsection, the term `new student loan volume' means the estimated 
    sum of all loans (other than consolidation loans) that will be made, 
    insured or guaranteed under this part and part B in the year for 
    which the determination is made. The Secretary shall base the 
    estimate described in the preceding sentence on the most recent 
    program data available.
    ``(b) Selection Criteria.--
        ``(1) Application.--Each institution of higher education 
    desiring to participate in the direct student loan program under 
    this part shall submit an application satisfactory to the Secretary 
    containing such information and assurances as the Secretary may 
    require.
        ``(2) Selection procedure.--The Secretary shall select 
    institutions for participation in the direct student loan program 
    under this part, and shall enter into agreements with such 
    institutions under section 454(a), from among those institutions 
    that submit the applications described in paragraph (1), and meet 
    such other eligibility requirements as the Secretary shall 
    prescribe, by, to the extent possible--
            ``(A)(i) categorizing such institutions according to 
        anticipated loan volume, length of academic program, control of 
        the institution, highest degree offered, size of student 
        enrollment, geographic location, annual loan volume, and default 
        experience; and
            ``(ii) beginning in academic year 1995-1996 selecting 
        institutions that are reasonably representative of each of the 
        categories described pursuant to clause (i); and
            ``(B) if the Secretary determines it necessary to carry out 
        the purposes of this part, selecting additional institutions.
    ``(c) Selection Criteria for Origination.--
        ``(1) In general.--The Secretary may enter into a supplemental 
    agreement with an institution (or a consortium of such institutions) 
    that--
            ``(A) has an agreement under subsection 454(a);
            ``(B) desires to originate loans under this part; and
            ``(C) meets the criteria described in paragraph (2).
        ``(2) Transition selection criteria.--For academic year 1994-
    1995, the Secretary may approve an institution to originate loans 
    only if such institution--
            ``(A) made loans under part E of this title in academic year 
        1993-1994 and did not exceed the applicable maximum default rate 
        under section 462(g) for the most recent fiscal year for which 
        data are available;
            ``(B) is not on the reimbursement system of payment for any 
        of the programs under subpart 1 or 3 of part A, part C, or part 
        E of this title;
            ``(C) is not overdue on program or financial reports or 
        audits required under this title;
            ``(D) is not subject to an emergency action, or a 
        limitation, suspension, or termination under section 
        428(b)(1)(T), 432(h), or 487(c);
            ``(E) in the opinion of the Secretary, has not had 
        significant deficiencies identified by a State postsecondary 
        review entity under subpart 1 of part H of this title;
            ``(F) in the opinion of the Secretary, has not had severe 
        performance deficiencies for any of the programs under this 
        title, including such deficiencies demonstrated by audits or 
        program reviews submitted or conducted during the 5 calendar 
        years immediately preceding the date of application;
            ``(G) provides an assurance that such institution has no 
        delinquent outstanding debts to the Federal Government, unless 
        such debts are being repaid under or in accordance with a 
        repayment arrangement satisfactory to the Federal Government, or 
        the Secretary in the Secretary's discretion determines that the 
        existence or amount of such debts has not been finally 
        determined by the cognizant Federal agency; and
            ``(H) meets such other criteria as the Secretary may 
        establish to protect the financial interest of the United States 
        and to promote the purposes of this part.
        ``(3) Regulations governing approval after transition.--For 
    academic year 1995-1996 and subsequent academic years, the Secretary 
    shall promulgate and publish in the Federal Register regulations 
    governing the approval of institutions to originate loans under this 
    part in accordance with section 457(a)(2).
    ``(d) Eligible Institutions.--The Secretary may not select an 
institution of higher education for participation under this section 
unless such institution is an eligible institution under section 435(a).
    ``(e) Consortia.--Subject to such requirements as the Secretary may 
prescribe, eligible institutions of higher education (as determined 
under subsection (d)) with agreements under section 454(a) may apply to 
the Secretary as consortia to originate loans under this part for 
students in attendance at such institutions. Each such institution shall 
be required to meet the requirements of subsection (c) with respect to 
loan origination.

``SEC. 454. AGREEMENTS WITH INSTITUTIONS.

    ``(a) Participation Agreements.--An agreement with any institution 
of higher education for participation in the direct student loan program 
under this part shall--
        ``(1) provide for the establishment and maintenance of a direct 
    student loan program at the institution under which the institution 
    will--
            ``(A) identify eligible students who seek student financial 
        assistance at such institution in accordance with section 484;
            ``(B) estimate the need of each such student as required by 
        part F of this title for an academic year, except that, any loan 
        obtained by a student under this part with the same terms as 
        loans made under section 428H (except as otherwise provided in 
        this part), or a loan obtained by a parent under this part with 
        the same terms as loans made under section 428B (except as 
        otherwise provided in this part), or obtained under any State-
        sponsored or private loan program, may be used to offset the 
        expected family contribution of the student for that year;
            ``(C) provide a statement that certifies the eligibility of 
        any student to receive a loan under this part that is not in 
        excess of the annual or aggregate limit applicable to such loan, 
        except that the institution may, in exceptional circumstances 
        identified by the Secretary, refuse to certify a statement that 
        permits a student to receive a loan under this part, or certify 
        a loan amount that is less than the student's determination of 
        need (as determined under part F of this title), if the reason 
        for such action is documented and provided in written form to 
        such student;
            ``(D) set forth a schedule for disbursement of the proceeds 
        of the loan in installments, consistent with the requirements of 
        section 428G; and
            ``(E) provide timely and accurate information--
                ``(i) concerning the status of student borrowers (and 
            students on whose behalf parents borrow under this part) 
            while such students are in attendance at the institution and 
            concerning any new information of which the institution 
            becomes aware for such students (or their parents) after 
            such borrowers leave the institution, to the Secretary for 
            the servicing and collecting of loans made under this part; 
            and
                ``(ii) if the institution does not have an agreement 
            with the Secretary under subsection (b), concerning student 
            eligibility and need, as determined under subparagraphs (A) 
            and (B), to the Secretary as needed for the alternative 
            origination of loans to eligible students and parents in 
            accordance with this part;
        ``(2) provide assurances that the institution will comply with 
    requirements established by the Secretary relating to student loan 
    information with respect to loans made under this part;
        ``(3) provide that the institution accepts responsibility and 
    financial liability stemming from its failure to perform its 
    functions pursuant to the agreement;
        ``(4) provide that students at the institution and their parents 
    (with respect to such students) will be eligible to participate in 
    the programs under part B of this title at the discretion of the 
    Secretary for the period during which such institution participates 
    in the direct student loan program under this part, except that a 
    student or parent may not receive loans under both this part and 
    part B for the same period of enrollment;
        ``(5) provide for the implementation of a quality assurance 
    system, as established by the Secretary and developed in 
    consultation with institutions of higher education, to ensure that 
    the institution is complying with program requirements and meeting 
    program objectives;
        ``(6) provide that the institution will not charge any fees of 
    any kind, however described, to student or parent borrowers for 
    origination activities or the provision of any information necessary 
    for a student or parent to receive a loan under this part, or any 
    benefits associated with such loan; and
        ``(7) include such other provisions as the Secretary determines 
    are necessary to protect the interests of the United States and to 
    promote the purposes of this part.
    ``(b) Origination.--An agreement with any institution of higher 
education, or consortia thereof, for the origination of loans under this 
part shall--
        ``(1) supplement the agreement entered into in accordance with 
    subsection (a);
        ``(2) include provisions established by the Secretary that are 
    similar to the participation agreement provisions described in 
    paragraphs (1)(E)(ii), (2), (3), (4), (5), (6), and (7) of 
    subsection (a), as modified to relate to the origination of loans by 
    the institution or consortium;
        ``(3) provide that the institution or consortium will originate 
    loans to eligible students and parents in accordance with this part; 
    and
        ``(4) provide that the note or evidence of obligation on the 
    loan shall be the property of the Secretary.
    ``(c) Withdrawal and Termination Procedures.--The Secretary shall 
establish procedures by which institutions or consortia may withdraw or 
be terminated from the program under this part.

``SEC. 455. TERMS AND CONDITIONS OF LOANS.

    ``(a) In General.--
        ``(1) Parallel terms, conditions, benefits, and amounts.--Unless 
    otherwise specified in this part, loans made to borrowers under this 
    part shall have the same terms, conditions, and benefits, and be 
    available in the same amounts, as loans made to borrowers under 
    sections 428, 428B, and 428H of this title.
        ``(2) Designation of loans.--Loans made to borrowers under this 
    part that, except as otherwise specified in this part, have the same 
    terms, conditions, and benefits as loans made to borrowers under--
            ``(A) section 428 shall be known as `Federal Direct Stafford 
        Loans';
            ``(B) section 428B shall be known as `Federal Direct PLUS 
        Loans'; and
            ``(C) section 428H shall be known as `Federal Direct 
        Unsubsidized Stafford Loans'.
    ``(b) Interest Rate.--
        ``(1) Rates for fdsl and fdusl.--For Federal Direct Stafford 
    Loans and Federal Direct Unsubsidized Stafford Loans for which the 
    first disbursement is made on or after July 1, 1994, the applicable 
    rate of interest shall, during any 12-month period beginning on July 
    1 and ending on June 30, be determined on the preceding June 1 and 
    be equal to--
            ``(A) the bond equivalent rate of 91-day Treasury bills 
        auctioned at the final auction held prior to such June 1; plus
            ``(B) 3.1 percent,
    except that such rate shall not exceed 8.25 percent.
        ``(2) In school and grace period rules.--(A) Notwithstanding the 
    provisions of paragraph (1), but subject to paragraph (3), with 
    respect to any Federal Direct Stafford Loan or Federal Direct 
    Unsubsidized Stafford Loan for which the first disbursement is made 
    on or after July 1, 1995, the applicable rate of interest for 
    interest which accrues--
            ``(i) prior to the beginning of the repayment period of the 
        loan; or
            ``(ii) during the period in which principal need not be paid 
        (whether or not such principal is in fact paid) by reason of a 
        provision described in section 428(b)(1)(M) or 427(a)(2)(C),
    shall not exceed the rate determined under subparagraph (B).
        ``(B) For the purpose of subparagraph (A), the rate determined 
    under this subparagraph shall, during any 12-month period beginning 
    on July 1 and ending on June 30, be determined on the preceding June 
    1 and be equal to--
            ``(i) the bond equivalent rate of 91-day Treasury bills 
        auctioned at the final auction prior to such June 1; plus
            ``(ii) 2.5 percent,
    except that such rate shall not exceed 8.25 percent.
        ``(3) Out-year rule.--Notwithstanding paragraphs (1) and (2), 
    for Federal Direct Stafford Loans and Federal Direct Unsubsidized 
    Stafford Loans made on or after July 1, 1998, the applicable rate of 
    interest shall, during any 12-month period beginning on July 1 and 
    ending on June 30, be determined on the preceding June 1 and be 
    equal to--
            ``(A) the bond equivalent rate of the security with a 
        comparable maturity as established by the Secretary; plus
            ``(B) 1.0 percent,
    except that such rate shall not exceed 8.25 percent.
        ``(4) Rates for fdplus.--(A) For Federal Direct PLUS Loans for 
    which the first disbursement is made on or after July 1, 1994, the 
    applicable rate of interest shall, during any 12-month period 
    beginning on July 1 and ending on June 30, be determined on the 
    preceding June 1 and be equal to--
            ``(i) the bond equivalent rate of 52-week Treasury bills 
        auctioned at final auction held prior to such June 1; plus
            ``(ii) 3.1 percent,
    except that such rate shall not exceed 9 percent.
        ``(B) For Federal Direct PLUS loans made on or after July 1, 
    1998, the applicable rate of interest shall, during any 12-month 
    period beginning on July 1 and ending on June 30, be determined on 
    the preceding June 1 and be equal to--
            ``(i) the bond equivalent rate of the security with a 
        comparable maturity as established by the Secretary; plus
            ``(ii) 2.1 percent,
    except that such rate shall not exceed 9 percent.
        ``(5) Publication.--The Secretary shall determine the applicable 
    rates of interest under this subsection after consultation with the 
    Secretary of the Treasury and shall publish such rate in the Federal 
    Register as soon as practicable after the date of determination.
    ``(c) Loan Fee.--The Secretary shall charge the borrower of a loan 
made under this part an origination fee of 4.0 percent of the principal 
amount of loan.
    ``(d) Repayment Plans.--
        ``(1) Design and selection.--Consistent with criteria 
    established by the Secretary, the Secretary shall offer a borrower 
    of a loan made under this part a variety of plans for repayment of 
    such loan, including principal and interest on the loan. The 
    borrower shall be entitled to accelerate, without penalty, repayment 
    on the borrower's loans under this part. The borrower may choose--
            ``(A) a standard repayment plan, with a fixed annual 
        repayment amount paid over a fixed period of time, consistent 
        with subsection (a)(1) of this section;
            ``(B) an extended repayment plan, with a fixed annual 
        repayment amount paid over an extended period of time, except 
        that the borrower shall annually repay a minimum amount 
        determined by the Secretary in accordance with section 
        428(b)(1)(L);
            ``(C) a graduated repayment plan, with annual repayment 
        amounts established at 2 or more graduated levels and paid over 
        a fixed or extended period of time, except that the borrower's 
        scheduled payments shall not be less than 50 percent, nor more 
        than 150 percent, of what the amortized payment on the amount 
        owed would be if the loan were repaid under the standard 
        repayment plan; and
            ``(D) an income contingent repayment plan, with varying 
        annual repayment amounts based on the income of the borrower, 
        paid over an extended period of time prescribed by the 
        Secretary, not to exceed 25 years, except that the plan 
        described in this subparagraph shall not be available to the 
        borrower of a Federal Direct PLUS loan.
        ``(2) Selection by secretary.--If a borrower of a loan made 
    under this part does not select a repayment plan described in 
    paragraph (1), the Secretary may provide the borrower with a 
    repayment plan described in subparagraph (A), (B), or (C) of 
    paragraph (1).
        ``(3) Changes in selections.--The borrower of a loan made under 
    this part may change the borrower's selection of a repayment plan 
    under paragraph (1), or the Secretary's selection of a plan for the 
    borrower under paragraph (2), as the case may be, under such terms 
    and conditions as may be established by the Secretary.
        ``(4) Alternative repayment plans.--The Secretary may provide, 
    on a case by case basis, an alternative repayment plan to a borrower 
    of a loan made under this part who demonstrates to the satisfaction 
    of the Secretary that the terms and conditions of the repayment 
    plans available under paragraph (1) are not adequate to accommodate 
    the borrower's exceptional circumstances. In designing such 
    alternative repayment plans, the Secretary shall ensure that such 
    plans do not exceed the cost to the Federal Government, as 
    determined on the basis of the present value of future payments by 
    such borrowers, of loans made using the plans available under 
    paragraph (1).
        ``(5) Repayment after default.--The Secretary may require any 
    borrower who has defaulted on a loan made under this part to--
            ``(A) pay all reasonable collection costs associated with 
        such loan; and
            ``(B) repay the loan pursuant to an income contingent 
        repayment plan.
    ``(e) Income Contingent Repayment.--
        ``(1) Information and procedures.--The Secretary may obtain such 
    information as is reasonably necessary regarding the income of a 
    borrower (and the borrower's spouse, if applicable) of a loan made 
    under this part that is, or may be, repaid pursuant to income 
    contingent repayment, for the purpose of determining the annual 
    repayment obligation of the borrower. Returns and return information 
    (as defined in section 6103 of the Internal Revenue Code of 1986) 
    may be obtained under the preceding sentence only to the extent 
    authorized by section 6103(l)(13) of such Code. The Secretary shall 
    establish procedures for determining the borrower's repayment 
    obligation on that loan for such year, and such other procedures as 
    are necessary to implement effectively income contingent repayment.
        ``(2) Repayment based on adjusted gross income.--A repayment 
    schedule for a loan made under this part and repaid pursuant to 
    income contingent repayment shall be based on the adjusted gross 
    income (as defined in section 62 of the Internal Revenue Code of 
    1986) of the borrower or, if the borrower is married and files a 
    Federal income tax return jointly with the borrower's spouse, on the 
    adjusted gross income of the borrower and the borrower's spouse.
        ``(3) Additional documents.--A borrower who chooses, or is 
    required, to repay a loan made under this part pursuant to income 
    contingent repayment, and for whom adjusted gross income is 
    unavailable or does not reasonably reflect the borrower's current 
    income, shall provide to the Secretary other documentation of income 
    satisfactory to the Secretary, which documentation the Secretary may 
    use to determine an appropriate repayment schedule.
        ``(4) Repayment schedules.--Income contingent repayment 
    schedules shall be established by regulations promulgated by the 
    Secretary and shall require payments that vary in relation to the 
    appropriate portion of the annual income of the borrower (and the 
    borrower's spouse, if applicable) as determined by the Secretary.
        ``(5) Calculation of balance due.--The balance due on a loan 
    made under this part that is repaid pursuant to income contingent 
    repayment shall equal the unpaid principal amount of the loan, any 
    accrued interest, and any fees, such as late charges, assessed on 
    such loan. The Secretary may promulgate regulations limiting the 
    amount of interest that may be capitalized on such loan, and the 
    timing of any such capitalization.
        ``(6) Notification to borrowers.--The Secretary shall establish 
    procedures under which a borrower of a loan made under this part who 
    chooses or is required to repay such loan pursuant to income 
    contingent repayment is notified of the terms and conditions of such 
    plan, including notification of such borrower--
            ``(A) that the Internal Revenue Service will disclose to the 
        Secretary tax return information as authorized under section 
        6103(l)(13) of the Internal Revenue Code of 1986; and
            ``(B) that if a borrower considers that special 
        circumstances, such as a loss of employment by the borrower or 
        the borrower's spouse, warrant an adjustment in the borrower's 
        loan repayment as determined using the information described in 
        subparagraph (A), or the alternative documentation described in 
        paragraph (3), the borrower may contact the Secretary, who shall 
        determine whether such adjustment is appropriate, in accordance 
        with criteria established by the Secretary.
    ``(f) Deferment.--
        ``(1) Effect on principal and interest.--A borrower of a loan 
    made under this part who meets the requirements described in 
    paragraph (2) shall be eligible for a deferment, during which 
    periodic installments of principal need not be paid, and interest--
            ``(A) shall not accrue, in the case of a--
                ``(i) Federal Direct Stafford Loan; or
                ``(ii) a Federal Direct Consolidation Loan that 
            consolidated only Federal Direct Stafford Loans, or a 
            combination of such loans and Federal Stafford Loans for 
            which the student borrower received an interest subsidy 
            under section 428; or
            ``(B) shall accrue and be capitalized or paid by the 
        borrower, in the case of a Federal Direct PLUS Loan, a Federal 
        Direct Unsubsidized Stafford Loan, or a Federal Direct 
        Consolidation Loan not described in subparagraph (A)(ii).
        ``(2) Eligibility.--A borrower of a loan made under this part 
    shall be eligible for a deferment during any period--
            ``(A) during which the borrower--
                ``(i) is carrying at least one-half the normal full-time 
            work load for the course of study that the borrower is 
            pursuing, as determined by the eligible institution (as such 
            term is defined in section 435(a)) the borrower is 
            attending; or
                ``(ii) is pursuing a course of study pursuant to a 
            graduate fellowship program approved by the Secretary, or 
            pursuant to a rehabilitation training program for 
            individuals with disabilities approved by the Secretary,
        except that no borrower shall be eligible for a deferment under 
        this subparagraph, or a loan made under this part (other than a 
        Federal Direct PLUS Loan or a Federal Direct Consolidation 
        Loan), while serving in a medical internship or residency 
        program;
            ``(B) not in excess of 3 years during which the borrower is 
        seeking and unable to find full-time employment;
            ``(C) not in excess of 3 years during which the Secretary 
        determines, in accordance with regulations prescribed under 
        section 435(o), that the borrower has experienced or will 
        experience an economic hardship.
    ``(g) Federal Direct Consolidation Loans.--A borrower of a loan made 
under this part may consolidate such loan with the loans described in 
section 428C(a)(4) only under such terms and conditions as the Secretary 
shall establish pursuant to section 457(a)(1) or regulations promulgated 
under this part. Loans made under this subsection shall be known as 
`Federal Direct Consolidation Loans'.
    ``(h) Borrower Defenses.--Notwithstanding any other provision of 
State or Federal law, the Secretary shall specify in regulations (except 
as authorized under section 457(a)(1)) which acts or omissions of an 
institution of higher education a borrower may assert as a defense to 
repayment of a loan made under this part, except that in no event may a 
borrower recover from the Secretary, in any action arising from or 
relating to a loan made under this part, an amount in excess of the 
amount such borrower has repaid on such loan.
    ``(i) Loan Application and Promissory Note.--The common financial 
reporting form required in section 483(a)(1) shall constitute the 
application for loans made under this part (other than a Federal Direct 
PLUS loan). The Secretary shall develop, print, and distribute to 
participating institutions a standard promissory note and loan 
disclosure form.
    ``(j) Loan Disbursement.--
        ``(1) In general.--Proceeds of loans to students under this part 
    shall be applied to the student's account for tuition and fees, and, 
    in the case of institutionally owned housing, to room and board. 
    Loan proceeds that remain after the application of the previous 
    sentence shall be delivered to the borrower by check or other means 
    that is payable to and requires the endorsement or other 
    certification by such borrower.
        ``(2) Payment periods.--The Secretary shall establish periods 
    for the payments described in paragraph (1) in a manner consistent 
    with payment of basic grants under subpart 1 of part A of this 
    title.
    ``(k) Fiscal Control and Fund Accountability.--
        ``(1) In general.--(A) An institution shall maintain financial 
    records in a manner consistent with records maintained for other 
    programs under this title.
        ``(B) Except as otherwise required by regulations of the 
    Secretary, or in a notice under section 457(a)(1), an institution 
    may maintain loan funds under this part in the same account as other 
    Federal student financial assistance.
        ``(2) Payments and refunds.--Payments and refunds shall be 
    reconciled in a manner consistent with the manner set forth for the 
    submission of a payment summary report required of institutions 
    participating in the program under subpart 1 of part A, except that 
    nothing in this paragraph shall prevent such reconciliations on a 
    monthly basis.
        ``(3) Transaction histories.--All transaction histories under 
    this part shall be maintained using the same system designated by 
    the Secretary for the provision of basic grants under subpart 1 of 
    part A of this title.

``SEC. 456. CONTRACTS.

    ``(a) Contracts for Supplies and Services.--
        ``(1) In general.--The Secretary shall, to the extent 
    practicable, award contracts for origination, servicing, and 
    collection described in subsection (b). In awarding such contracts, 
    the Secretary shall ensure that such services and supplies are 
    provided at competitive prices.
        ``(2) Entities.--The entities with which the Secretary may enter 
    into contracts shall include only entities which the Secretary 
    determines are qualified to provide such services and supplies and 
    will comply with the procedures applicable to the award of such 
    contracts. In the case of awarding contracts for the origination, 
    servicing, and collection of loans under this part, the Secretary 
    shall enter into contracts only with entities that have extensive 
    and relevant experience and demonstrated effectiveness. The entities 
    with which the Secretary may enter into such contracts shall 
    include, where practicable, agencies with agreements with the 
    Secretary under sections 428(b) and (c), if such agencies meet the 
    qualifications as determined by the Secretary under this subsection 
    and if those agencies have such experience and demonstrated 
    effectiveness. In awarding contracts to such State agencies, the 
    Secretary shall, to the extent practicable and consistent with the 
    purposes of this part, give special consideration to State agencies 
    with a history of high quality performance to perform services for 
    institutions of higher education within their State.
        ``(3) Rule of construction.--Nothing in this section shall be 
    construed as a limitation of the authority of any State agency to 
    enter into an agreement for the purposes of this section as a member 
    of a consortium of State agencies.
    ``(b) Contracts for Origination, Servicing, and Data Systems.--The 
Secretary may enter into contracts for--
        ``(1) the alternative origination of loans to students attending 
    institutions of higher education with agreements to participate in 
    the program under this part (or their parents), if such institutions 
    do not have agreements with the Secretary under section 454(b);
        ``(2) the servicing and collection of loans made under this 
    part;
        ``(3) the establishment and operation of 1 or more data systems 
    for the maintenance of records on all loans made under this part;
        ``(4) services to assist in the orderly transition from the loan 
    programs under part B to the direct student loan program under this 
    part; and
        ``(5) such other aspects of the direct student loan program as 
    the Secretary determines are necessary to ensure the successful 
    operation of the program.

``SEC. 457. REGULATORY ACTIVITIES.

    ``(a) Notice in Lieu of Regulations for First Year of Program.--
        ``(1) Notice in lieu of regulations for first year of program.--
    The Secretary shall publish in the Federal Register whatever 
    standards, criteria, and procedures, consistent with the provisions 
    of this part, the Secretary, in consultation with members of the 
    higher education community, determines are reasonable and necessary 
    to the successful implementation of the first year of the direct 
    student loan program authorized by this part. Section 431 of the 
    General Education Provisions Act shall not apply to the publication 
    of such standards, criteria, and procedures.
        ``(2) Negotiated rulemaking.--Beginning with academic year 1995-
    1996, all standards, criteria, procedures, and regulations 
    implementing this part as amended by the Student Loan Reform Act of 
    1993 shall, to the extent practicable, be subject to negotiated 
    rulemaking, including all such standards, criteria, procedures, and 
    regulations promulgated from the date of enactment of such Act.
    ``(b) Closing Date for Applications From Institutions.--The 
Secretary shall establish a date not later than October 1, 1993, as the 
closing date for receiving applications from institutions of higher 
education desiring to participate in the first year of the direct loan 
program under this part.
    ``(c) Publication of List of Participating Institutions.--Not later 
than January 1, 1994, the Secretary shall publish in the Federal 
Register a list of the institutions of higher education selected to 
participate in the first year of the direct loan program under this 
part.

``SEC. 458. FUNDS FOR ADMINISTRATIVE EXPENSES.

    ``(a) In General.--Each fiscal year, there shall be available to the 
Secretary of Education from funds available pursuant to section 422(g) 
and from funds not otherwise appropriated, funds to be obligated for 
administrative costs under this part, including the costs of the 
transition from the loan programs under part B to the direct student 
loan programs under this part (including the costs of annually assessing 
the program under this part and the progress of the transition) and 
transition support (including administrative costs) for the expenses of 
guaranty agencies in servicing outstanding loans in their portfolios and 
in guaranteeing new loans, not to exceed (from such funds not otherwise 
appropriated) $260,000,000 in fiscal year 1994, $345,000,000 in fiscal 
year 1995, $550,000,000 in fiscal year 1996, $595,000,000 in fiscal year 
1997, and $750,000,000 in fiscal year 1998. If in any fiscal year the 
Secretary determines that additional funds for administrative expenses 
are needed as a result of such transition or the expansion of the direct 
student loan programs under this part, the Secretary is authorized to 
use funds available under this section for a subsequent fiscal year for 
such expenses, except that the total expenditures by the Secretary (from 
such funds not otherwise appropriated) shall not exceed $2,500,000,000 
in fiscal years 1994 through 1998. The Secretary is also authorized to 
carry over funds available under this section to a subsequent fiscal 
year.
    ``(b) Availability.--Funds made available under subsection (a) shall 
remain available until expended.
    ``(c) Budget Justification.--No funds may be expended under this 
section unless the Secretary includes in the Department of Education's 
annual budget justification to Congress a detailed description of the 
specific activities for which the funds made available by this section 
have been used in the prior and current years (if applicable), the 
activities and costs planned for the budget year, and the projection of 
activities and costs for each remaining year for which administrative 
expenses under this section are made available.
    ``(d) Notification.--In the event the Secretary finds it necessary 
to use the authority provided to the Secretary under subsection (a) to 
draw funds for administrative expenses from a future year's funds, no 
funds may be expended under this section unless the Secretary 
immediately notifies the Committees on Appropriations of the Senate and 
of the House of Representatives, and the Labor and Human Resources 
Committee of the Senate and the Education and Labor Committee of the 
House of Representatives, of such action and explain the reasons for 
such action.''.

  CHAPTER 2--CONFORMING AMENDMENTS TO THE HIGHER EDUCATION ACT OF 1965

SEC. 4041. PRESERVING LOAN ACCESS.

    (a) Advances to Guaranty Agencies for Lender-of-Last-Resort 
Services.--
        (1) Amendment.--Section 428(j) of the Act (20 U.S.C. 1078(j)) is 
    amended by striking paragraph (3) and inserting the following:
        ``(3) Advances to guaranty agencies for lender-of-last-resort 
    services during transition to direct lending.--(A) In order to 
    ensure the availability of loan capital during the transition from 
    the Federal Family Education Loan Program under this part to the 
    Federal Direct Student Loan Program under part D of this title, the 
    Secretary is authorized to provide a guaranty agency with additional 
    advance funds in accordance with section 422(c)(7), with such 
    restrictions on the use of such funds as are determined appropriate 
    by the Secretary, in order to ensure that the guaranty agency will 
    make loans as the lender-of-last-resort. Such agency shall make such 
    loans in accordance with this subsection and the requirements of the 
    Secretary.
        ``(B) Notwithstanding any other provision in this part, a 
    guaranty agency serving as a lender-of-last-resort under this 
    paragraph shall be paid a fee, established by the Secretary, for 
    making such loans in lieu of interest and special allowance 
    subsidies, and shall be required to assign such loans to the 
    Secretary on demand. Upon such assignment, the portion of the 
    advance represented by the loans assigned shall be considered repaid 
    by such guaranty agency.''.
        (2) Conforming amendments.--
            (A) Advances to guarantee agencies.--Section 422(c)(7) of 
        the Act (20 U.S.C. 1072(c)(7)) is amended by striking all 
        beginning with ``to a guaranty agency'' through the period and 
        inserting ``to a guaranty agency--
            ``(A) in accordance with section 428(j), in order to ensure 
        that the guaranty agency shall make loans as the lender-of-last-
        resort during the transition from the Federal Family Education 
        Loan Program under this part to the Federal Direct Student Loan 
        Program under part D of this title; or
            ``(B) if the Secretary is seeking to terminate the guaranty 
        agency's agreement, or assuming the guaranty agency's functions, 
        in accordance with section 428(c)(10)(F)(v), in order to assist 
        the agency in meeting its immediate cash needs, ensure the 
        uninterrupted payment of claims, or ensure that the guaranty 
        agency shall make loans as described in subparagraph (A);''.
            (B) Rules and operating procedures.--Section 428(j)(2) of 
        the Act (20 U.S.C. 1078(j)(2)) is amended--
                (i) in subparagraph (A), by inserting before the 
            semicolon at the end the following: ``and ensure a response 
            within 60 days after the student's original complete 
            application is filed under this subsection'';
                (ii) by redesignating subparagraphs (B) through (D) as 
            subparagraphs (C) through (E), respectively; and
                (iii) by inserting after subparagraph (A) the following 
            new subparagraph:
            ``(B) consistent with standards established by the 
        Secretary, students applying for loans under this subsection 
        shall not be subject to additional eligibility requirements or 
        requests for additional information beyond what is required 
        under this title in order to receive a loan under this part from 
        an eligible lender, nor be required to receive more than two 
        rejections from eligible lenders in order to obtain a loan under 
        this subsection;''.
    (b) Lender Referral Services.--Section 428(e) of the Act (20 U.S.C. 
1078(e)) is amended--
        (1) in paragraph (1)--
            (A) by amending the paragraph heading to read as follows: 
        ``In general; agreements with guaranty agencies.--'';
            (B) by inserting the subparagraph designation ``(A)'' 
        immediately before ``The Secretary'';
            (C) by striking ``in any State'' and inserting ``with which 
        the Secretary has an agreement under subparagraph (B)''; and
            (D) by adding at the end the following new subparagraph:
        ``(B)(i) The Secretary may enter into agreements with guaranty 
    agencies that meet standards established by the Secretary to provide 
    lender referral services in geographic areas specified by the 
    Secretary. Such guaranty agencies shall be paid in accordance with 
    paragraph (3) for such services.
        ``(ii) The Secretary shall publish in the Federal Register 
    whatever standards, criteria, and procedures, consistent with the 
    provisions of this part and part D of this title, the Secretary 
    determines are reasonable and necessary to provide lender referral 
    services under this subsection and ensure loan access to student and 
    parent borrowers during the transition from the loan programs under 
    this part to the direct student loan programs under part D of this 
    title. Section 431 of the General Education Provisions Act shall not 
    apply to the publication of such standards, criteria, and 
    procedures.'';
        (2) in paragraph (2)--
            (A) in the matter preceding subparagraph (A), by striking 
        ``in a State'' and inserting ``with which the Secretary has an 
        agreement under paragraph (1)(B)'';
            (B) by amending subparagraph (A) to read as follows:
            ``(A)(i) such student is either a resident of, or is 
        accepted for enrollment in, or is attending, an eligible 
        institution located in a geographic area for which the Secretary 
        (I) determines that loans are not available to all eligible 
        students, and (II) has entered into an agreement with a guaranty 
        agency under paragraph (1)(B) to provide lender referral 
        services; and'';
        (3) in paragraph (3), by striking ``The'' and inserting ``From 
    funds available for costs of transition under section 458 of the 
    Act, the''; and
        (4) by striking paragraph (5).
    (c) Lender-of-Last-Resort Functions of Student Loan Marketing 
Association.--Subsection (q) of section 439 of the Act (20 U.S.C. 1087-
2(q)) is amended to read as follows:
    ``(q) Lender-of-Last-Resort.--
        ``(1) Action at request of secretary.--(A) Whenever the 
    Secretary determines that eligible borrowers are seeking and are 
    unable to obtain loans under this part, the Association or its 
    designated agent shall, not later than 90 days after the date of 
    enactment of the Student Loan Reform Act of 1993, begin making loans 
    to such eligible borrowers in accordance with this subsection at the 
    request of the Secretary. The Secretary may request that the 
    Association make loans to borrowers within a geographic area or for 
    the benefit of students attending institutions of higher education 
    that certify, in accordance with standards established by the 
    Secretary, that their students are seeking and unable to obtain 
    loans.
        ``(B) Loans made pursuant to this subsection shall be insurable 
    by the Secretary under section 429 with a certificate of 
    comprehensive insurance coverage provided for under section 
    429(b)(1) or by a guaranty agency under paragraph (2)(A) of this 
    subsection.
        ``(2) Issuance and coverage of loans.--(A) Whenever the 
    Secretary, after consultation with, and with the agreement of, 
    representatives of the guaranty agency in a State, or an eligible 
    lender in a State described in section 435(d)(1)(D), determines that 
    a substantial portion of eligible borrowers in such State or within 
    an area of such State are seeking and are unable to obtain loans 
    under this part, the Association or its designated agent shall begin 
    making such loans to borrowers in such State or within an area of 
    such State in accordance with this subsection at the request of the 
    Secretary.
        ``(B) Loans made pursuant to this subsection shall be insurable 
    by the agency identified in subparagraph (A) having an agreement 
    pursuant to section 428(b). For loans insured by such agency, the 
    agency shall provide the Association with a certificate of 
    comprehensive insurance coverage, if the Association and the agency 
    have mutually agreed upon a means to determine that the agency has 
    not already guaranteed a loan under this part to a student which 
    would cause a subsequent loan made by the Association to be in 
    violation of any provision under this part.
        ``(3) Termination of lending.--The Association or its designated 
    agent shall cease making loans under this subsection at such time as 
    the Secretary determines that the conditions which caused the 
    implementation of this subsection have ceased to exist.''.

SEC. 4042. GUARANTY AGENCY RESERVES.

    Section 422 of the Act (20 U.S.C. 1072) is amended by adding at the 
end the following new subsection:
    ``(g) Preservation and Recovery of Guaranty Agency Reserves.--
        ``(1) Authority to recover funds.--Notwithstanding any other 
    provision of law, the reserve funds of the guaranty agencies, and 
    any assets purchased with such reserve funds, regardless of who 
    holds or controls the reserves or assets, shall be considered to be 
    the property of the United States to be used in the operation of the 
    program authorized by this part or the program authorized by part D 
    of this title. However, the Secretary may not require the return of 
    all reserve funds of a guaranty agency to the Secretary unless the 
    Secretary determines that such return is in the best interest of the 
    operation of the program authorized by this part or the program 
    authorized by part D of this title, or to ensure the proper 
    maintenance of such agency's funds or assets or the orderly 
    termination of the guaranty agency's operations and the liquidation 
    of its assets. The reserves shall be maintained by each guaranty 
    agency to pay program expenses and contingent liabilities, as 
    authorized by the Secretary, except that--
            ``(A) the Secretary may direct a guaranty agency to return 
        to the Secretary a portion of its reserve fund which the 
        Secretary determines is unnecessary to pay the program expenses 
        and contingent liabilities of the guaranty agency;
            ``(B) the Secretary may direct the guaranty agency to 
        require the return, to the guaranty agency or to the Secretary, 
        of any reserve funds or assets held by, or under the control of, 
        any other entity, which the Secretary determines are necessary 
        to pay the program expenses and contingent liabilities of the 
        guaranty agency, or which are required for the orderly 
        termination of the guaranty agency's operations and the 
        liquidation of its assets;
            ``(C) the Secretary may direct a guaranty agency, or such 
        agency's officers or directors, to cease any activities 
        involving expenditure, use or transfer of the guaranty agency's 
        reserve funds or assets which the Secretary determines is a 
        misapplication, misuse, or improper expenditure of such funds or 
        assets; and
            ``(D) any such determination under subparagraph (A) or (B) 
        shall be based on standards prescribed by regulations that are 
        developed through negotiated rulemaking and that include 
        procedures for administrative due process.
        ``(2) Termination provisions in contracts.--(A) To ensure that 
    the funds and assets of the guaranty agency are preserved, any 
    contract with respect to the administration of a guaranty agency's 
    reserve funds, or the administration of any assets purchased or 
    acquired with the reserve funds of the guaranty agency, that is 
    entered into or extended by the guaranty agency, or any other party 
    on behalf of or with the concurrence of the guaranty agency, after 
    the date of enactment of this subsection shall provide that the 
    contract is terminable by the Secretary upon 30 days notice to the 
    contracting parties if the Secretary determines that such contract 
    includes an impermissible transfer of the reserve funds or assets, 
    or is otherwise inconsistent with the terms or purposes of this 
    section.
        ``(B) The Secretary may direct a guaranty agency to suspend or 
    cease activities under any contract entered into by or on behalf of 
    such agency after January 1, 1993, if the Secretary determines that 
    the misuse or improper expenditure of such guaranty agency's funds 
    or assets or such contract provides unnecessary or improper benefits 
    to such agency's officers or directors.
        ``(3) Penalties.--Violation of any direction issued by the 
    Secretary under this subsection may be subject to the penalties 
    described in section 490 of this Act.
        ``(4) Availability of funds.--Any funds that are returned or 
    otherwise recovered by the Secretary pursuant to this subsection 
    shall be available for expenditure for expenses pursuant to section 
    458 of this Act.''.

SEC. 4043. TERMS OF LOANS.

    (a) Amendment.--Section 428 of the Act (20 U.S.C. 1078) is amended--
        (1) in subsection (b)(1)(D), by striking ``be subject to'' 
    through the semicolon and inserting ``be subject to income 
    contingent repayment in accordance with subsection (m);''; and
        (2) in subsection (m)--
            (A) by amending paragraph (1) to read as follows:
        ``(1) Authority of secretary to require.--The Secretary shall 
    require at least 10 percent of the borrowers who have defaulted on 
    loans made under this part that are assigned to the Secretary under 
    subsection (c)(8) to repay those loans under an income contingent 
    repayment plan, the terms and conditions of which shall be 
    established by the Secretary and the same as, or similar to, an 
    income contingent repayment plan established for purposes of part D 
    of this title.''; and
            (B) by striking paragraphs (2), (3), and (4) and inserting 
        the following new paragraph:
        ``(2) Loans for which income contingent repayment may be 
    required.--A loan made under this part may be required to be repaid 
    under this subsection if the note or other evidence of the loan has 
    been assigned to the Secretary pursuant to subsection (c)(8).''.
    (b) Effective Date.--The amendments made by this section shall take 
effect on July 1, 1994.

SEC. 4044. ASSIGNMENT OF LOANS.

    Section 428(c)(8) of the Act (20 U.S.C. 1078(c)(8)) is amended--
        (1) in the first sentence, by inserting the subparagraph 
    designation ``(A)'' before ``If the'';
        (2) by striking the second and third sentences; and
        (3) by adding at the end the following new subparagraph:
        ``(B) An orderly transition from the Federal Family Education 
    Loan Program under this part to the Federal Direct Student Loan 
    Program under part D of this title shall be deemed to be in the 
    Federal fiscal interest, and a guaranty agency shall promptly assign 
    loans to the Secretary under this paragraph upon the Secretary's 
    request.''.
SEC. 4045. TERMINATION OF GUARANTY AGENCY AGREEMENTS; ASSUMPTION OF 
GUARANTY AGENCY FUNCTIONS BY THE SECRETARY.
    Section 428(c)(10) of the Act is amended--
        (1) in subparagraph (C), by inserting ``, as appropriate,'' 
    after ``the Secretary shall require'';
        (2) in subparagraph (D)--
            (A) by inserting the clause designation ``(i)'' before 
        ``Each'';
            (B) by striking ``Each'' and inserting ``If the Secretary is 
        not seeking to terminate the guaranty agency's agreement under 
        subparagraph (E), or assuming the guaranty agency's functions 
        under subparagraph (F), a'';
            (C) by adding at the end the following new clause:
        ``(ii) If the Secretary is seeking to terminate the guaranty 
    agency's agreement under subparagraph (E), or assuming the guaranty 
    agency's functions under subparagraph (F), a management plan 
    described in subparagraph (C) shall include the means by which the 
    Secretary and the guaranty agency shall work together to ensure the 
    orderly termination of the operations, and liquidation of the 
    assets, of the guaranty agency.'';
        (3) in subparagraph (E)--
            (A) in clause (ii), by striking ``or'' after the semicolon;
            (B) in clause (iii), by striking the period and inserting a 
        semicolon; and
            (C) by adding at the end the following new clauses:
            ``(iv) the Secretary determines that such action is 
        necessary to protect the Federal fiscal interest;
            ``(v) the Secretary determines that such action is necessary 
        to ensure the continued availability of loans to student or 
        parent borrowers; or
            ``(vi) the Secretary determines that such action is 
        necessary to ensure an orderly transition from the loan programs 
        under this part to the direct student loan programs under part D 
        of this title.'';
        (4) in subparagraph (F)--
            (A) in the matter preceding clause (i), by striking ``Except 
        as provided in subparagraph (G), if'' and inserting ``If'';
            (B) by amending clause (v) to read as follows:
            ``(v) provide the guaranty agency with additional advance 
        funds in accordance with section 422(c)(7), with such 
        restrictions on the use of such funds as is determined 
        appropriate by the Secretary, in order to--
                ``(I) meet the immediate cash needs of the guaranty 
            agency;
                ``(II) ensure the uninterrupted payment of claims; or
                ``(III) ensure that the guaranty agency will make loans 
            as the lender-of-last-resort, in accordance with subsection 
            (j);'';
            (C) in clause (vi)--
                (i) by striking ``and to avoid'' and inserting ``to 
            avoid'';
                (ii) by striking the period and inserting a comma and 
            ``and to ensure an orderly transition from the loan programs 
            under this part to the direct student loan programs under 
            part D of this title.''; and
                (iii) by redesignating such clause as clause (vii); and
            (D) by inserting after clause (v) the following new clause:
            ``(vi) use all funds and assets of the guaranty agency to 
        assist in the activities undertaken in accordance with this 
        subparagraph and take appropriate action to require the return, 
        to the guaranty agency or the Secretary, of any funds or assets 
        provided by the guaranty agency, under contract or otherwise, to 
        any person or organization; or'';
        (5) by striking subparagraph (G);
        (6) by redesignating subparagraphs (H), (I), and (J) as 
    subparagraphs (I), (J), and (K), respectively;
        (7) by inserting after subparagraph (F) the following new 
    subparagraphs:
        ``(G) Notwithstanding any other provision of Federal or State 
    law, if the Secretary has terminated or is seeking to terminate a 
    guaranty agency's agreement under subparagraph (E), or has assumed a 
    guaranty agency's functions under subparagraph (F)--
            ``(i) no State court may issue any order affecting the 
        Secretary's actions with respect to such guaranty agency;
            ``(ii) any contract with respect to the administration of a 
        guaranty agency's reserve funds, or the administration of any 
        assets purchased or acquired with the reserve funds of the 
        guaranty agency, that is entered into or extended by the 
        guaranty agency, or any other party on behalf of or with the 
        concurrence of the guaranty agency, after the date of enactment 
        of this subparagraph shall provide that the contract is 
        terminable by the Secretary upon 30 days notice to the 
        contracting parties if the Secretary determines that such 
        contract includes an impermissible transfer of the reserve funds 
        or assets, or is otherwise inconsistent with the terms or 
        purposes of this section; and
            ``(iii) no provision of State law shall apply to the actions 
        of the Secretary in terminating the operations of a guaranty 
        agency.
        ``(H) Notwithstanding any other provision of law, the 
    Secretary's liability for any outstanding liabilities of a guaranty 
    agency (other than outstanding student loan guarantees under this 
    part), the functions of which the Secretary has assumed, shall not 
    exceed the fair market value of the reserves of the guaranty agency, 
    minus any necessary liquidation or other administrative costs.''; 
    and
        (8) in subparagraph (K) (as redesignated by paragraph (5)), by 
    striking all beginning with ``system, together'' through the period 
    and inserting ``system and the progress of the transition from the 
    loan programs under this part to the direct student loan programs 
    under part D of this title.''.

SEC. 4046. CONSOLIDATION LOANS.

    (a) Cost Savings From Consolidation Loans.--Section 428C of the Act 
(20 U.S.C. 1078-3) is amended--
        (1) in subsection (a) by amending paragraph (3)(A) to read as 
    follows:
        ``(3) Definition of eligible borrowers.--(A) For the purpose of 
    this section, the term `eligible borrower' means a borrower who, at 
    the time of application for a consolidation loan is in repayment 
    status, or in a grace period preceding repayment, or is a delinquent 
    or defaulted borrower who will reenter repayment through loan 
    consolidation.'';
        (2) in subsection (b)--
            (A) in paragraph (1)--
                (i) in subparagraph (A)(ii), by inserting ``with income-
            sensitive repayment terms'' after ``obtain a consolidation 
            loan'';
                (ii) by redesignating subparagraph (E) as subparagraph 
            (F); and
                (iii) by inserting after subparagraph (D) the following 
            new subparagraph:
            ``(E) that the lender shall offer an income-sensitive 
        repayment schedule, established by the lender in accordance with 
        the regulations promulgated by the Secretary, to the borrower of 
        any consolidation loan made by the lender on or after July 1, 
        1994; and'';
            (B) in paragraph (4), by amending subparagraph (C) to read 
        as follows:
            ``(C)(i) provides that periodic installments of principal 
        need not be paid, but interest shall accrue and be paid in 
        accordance with clause (ii), during any period for which the 
        borrower would be eligible for a deferral under section 
        428(b)(1)(M), and that any such period shall not be included in 
        determining the repayment schedule pursuant to subsection (c)(2) 
        of this section; and
            ``(ii) provides that interest shall accrue and be paid--
                ``(I) by the Secretary, in the case of a consolidation 
            loan that consolidated only Federal Stafford Loans for which 
            the student borrower received an interest subsidy under 
            section 428; or
                ``(II) by the borrower, or capitalized, in the case of a 
            consolidation loan other than a loan described in subclause 
            (I);''; and
            (C) by adding at the end the following new paragraph:
        ``(5) Direct loans.--In the event that a borrower is unable to 
    obtain a consolidation loan from a lender with an agreement under 
    subsection (a)(1), or is unable to obtain a consolidation loan with 
    income-sensitive repayment terms acceptable to the borrower from 
    such a lender, the Secretary shall offer any such borrower who 
    applies for it, a direct consolidation loan. Such direct 
    consolidation loan shall, as requested by the borrower, be repaid 
    either pursuant to income contingent repayment under part D of this 
    title or pursuant to any other repayment provision under this 
    section. The Secretary shall not offer such loans if, in the 
    Secretary's judgment, the Department of Education does not have the 
    necessary origination and servicing arrangements in place for such 
    loans.''; and
        (3) in subsection (c)--
            (A) in paragraph (1), by amending subparagraphs (B) and (C) 
        to read as follows:
        ``(B) A consolidation loan made before July 1, 1994, shall bear 
    interest at an annual rate on the unpaid principal balance of the 
    loan that is equal to the greater of--
            ``(i) the weighted average of the interest rates on the 
        loans consolidated, rounded to the nearest whole percent; or
            ``(ii) 9 percent.
        ``(C) A consolidation loan made on or after July 1, 1994, shall 
    bear interest at an annual rate on the unpaid principal balance of 
    the loan that is equal to the weighted average of the interest rates 
    on the loans consolidated, rounded upward to the nearest whole 
    percent.'';
            (B) in paragraph (2)--
                (i) in subparagraph (A)--

                    (I) in the matter preceding clause (i), by striking 
                ``income sensitive repayment schedules. Such repayment 
                terms'' and inserting ``income-sensitive repayment 
                schedules, established by the lender in accordance with 
                the regulations of the Secretary. Except as required by 
                such income-sensitive repayment schedules, or by the 
                terms of repayment pursuant to income contingent 
                repayment offered by the Secretary under subsection 
                (b)(5), such repayment terms'';
                    (II) by redesignating clauses (i), (ii), (iii), 
                (iv), and (v) as clauses (ii), (iii), (iv), (v), and 
                (vi), respectively; and
                    (III) by inserting before clause (ii) (as 
                redesignated by subclause (II)) the following new 
                clause:

            ``(i) is less than $7,500, then such consolidation loan 
        shall be repaid in not more than 10 years;'';
                (ii) by striking subparagraph (B); and
                (iii) by redesignating subparagraph (C) as subparagraph 
            (B); and
            (C) in paragraph (3)(B), by inserting ``except as required 
        by the terms of repayment pursuant to income contingent 
        repayment offered by the Secretary under subsection (b)(5),'' 
        before ``the lender''.
    (b) Cohort Default Rate Conforming Amendments.--
        (1) Amendments to definition.--Section 435(m)(1) of the Act (20 
    U.S.C. 1085) is amended--
            (A) in subparagraph (A), by inserting ``(or on the portion 
        of a loan made under section 428C that is used to repay any such 
        loans)'' immediately after ``on such loans'';
            (B) in subparagraph (C), by inserting ``(or on the portion 
        of a loan made under section 428C that is used to repay any such 
        loans)'' immediately after ``on such loans''; and
            (C) in subparagraph (D)--
                (i) by inserting ``(or the portion of a loan made under 
            section 428C that is used to repay a loan made under such 
            section)'' after ``section 428A'' the first place it 
            appears; and
                (ii) by inserting ``(or a loan made under section 428C a 
            portion of which is used to repay a loan made under such 
            section)'' after ``section 428A'' the second place it 
            appears.
        (2) Conforming amendment.--Section 428C(a)(3)(B)(ii) of the Act 
    (20 U.S.C. 1078-3(a)(3)(B)(ii)) is amended by striking the second 
    sentence.
    (c) Effective Date.--The amendments made by this section shall take 
effect on July 1, 1994, except that the amendments made by subsection 
(a)(2)(B) shall take effect upon enactment.

SEC. 4047. CONSOLIDATION OF PROGRAMS.

    (a) In General.--Section 428H of the Act (20 U.S.C. 1078-9) is 
amended--
        (1) in the matter preceding paragraph (1) of subsection (b), by 
    inserting ``(including graduate and professional students as defined 
    in regulations promulgated by the Secretary)'' after ``484'';
        (2) by amending subsection (d) to read as follows:
    ``(d) Loan Limits.--
        ``(1) In general.--Except as provided in paragraphs (2) and (3), 
    the annual and aggregate limits for loans under this section shall 
    be the same as those established under section 428(b)(1), less any 
    amount received by such student pursuant to the subsidized loan 
    program established under section 428.
        ``(2) Annual limits for independent, graduate, and professional 
    students.--The maximum annual amount of loans under this section an 
    independent student (or a student whose parents are unable to borrow 
    under section 428B or the Federal Direct PLUS Loan Program) may 
    borrow in any academic year or its equivalent or in any period of 7 
    consecutive months, whichever is longer, shall be the amount 
    determined under paragraph (1), plus--
            ``(A) in the case of such a student attending an eligible 
        institution who has not completed such student's first 2 years 
        of undergraduate study--
                ``(i) $4,000, if such student is enrolled in a program 
            whose length is at least one academic year in length (as 
            determined under section 481);
                ``(ii) $2,500, if such student is enrolled in a program 
            whose length is less than one academic year, but at least 
            \2/3\ of such an academic year; and
                ``(iii) $1,500, if such student is enrolled in a program 
            whose length is less than \2/3\, but at least \1/3\, of such 
            an academic year;
            ``(B) in the case of such a student attending an eligible 
        institution who has completed the first 2 years of undergraduate 
        study but who has not completed the remainder of a program of 
        undergraduate study--
                ``(i) $5,000, if such student is enrolled in a program 
            whose length is at least one academic year in length (as 
            determined under section 481);
                ``(ii) $3,325, if such student is enrolled in a program 
            whose length is less than one academic year, but at least 
            \2/3\ of such an academic year; and
                ``(iii) $1,675, if such student is enrolled in a program 
            whose length is less than \2/3\, but at least \1/3\, of such 
            an academic year; and
            ``(C) in the case of such a student who is a graduate or 
        professional student attending an eligible institution, $10,000.
        ``(3) Aggregate limits for independent, graduate, and 
    professional students.--The maximum aggregate amount of loans under 
    this section a student described in paragraph (2) may borrow shall 
    be the amount described in paragraph (1), adjusted to reflect the 
    increased annual limits described in paragraph (2), as prescribed by 
    the Secretary by regulation.''; and
        (3) in subsection (e), by adding at the end the following new 
    paragraphs:
        ``(5) Amortization.--The amount of the periodic payment and the 
    repayment schedule for any loan made pursuant to this section shall 
    be established by assuming an interest rate equal to the applicable 
    rate of interest at the time the repayment of the principal amount 
    of the loan commences. At the option of the lender, the note or 
    other written evidence of the loan may require that--
            ``(A) the amount of the periodic payment will be adjusted 
        annually; or
            ``(B) the period of repayment of principal will be 
        lengthened or shortened,
    in order to reflect adjustments in interest rates occurring as a 
    consequence of section 427A(c)(4).
        ``(6) Repayment period.--For purposes of calculating the 10-year 
    repayment period under section 428(b)(1)(D), such period shall 
    commence at the time the first payment of principal is due from the 
    borrower.''.
    (b) Repeal.--Section 428A of the Act is repealed.
    (c) Terms, Conditions and Benefits.--Notwithstanding the amendments 
made by this section, with respect to loans provided under sections 428A 
and 428H of the Act (as such sections existed on the date preceding the 
date of enactment of this Act) the terms, conditions and benefits 
applicable to such loans under such sections shall continue to apply to 
such loans after the date of enactment of this Act.
    (d) Effective Date.--Except as otherwise provided herein, the 
amendments made by this section shall take effect on July 1, 1994.
      Subtitle B--Additional Savings From The Student Loan Programs

SEC. 4101. REDUCTION OF BORROWER INTEREST RATES.

    Section 427A of the Act (20 U.S.C. 1077a) is amended--
        (1) in subsection (c)(4), by adding at the end the following new 
    subparagraph:
        ``(E) Notwithstanding subparagraphs (A) and (D) for any loan 
    made pursuant to section 428B for which the first disbursement is 
    made on or after July 1, 1994--
            ``(i) subparagraph (B) shall be applied by substituting 
        ``3.1'' for ``3.25''; and
            ``(ii) the interest rate shall not exceed 9 percent.'';
        (2) by redesignating subsections (f), (g), and (h) as 
    subsections (i), (j), and (k) respectively;
        (3) by adding after subsection (e) the following new 
    subsections:
    ``(f) Interest Rates for New Loans After July 1, 1994.--
        ``(1) In general.--Notwithstanding subsections (a), (b), (d), 
    and (e) of this section, with respect to any loan made, insured, or 
    guaranteed under this part (other than a loan made pursuant to 
    section 428B or 428C) for which the first disbursement is made on or 
    after July 1, 1994, the applicable rate of interest shall, during 
    any 12-month period beginning on July 1 and ending on June 30, be 
    determined on the preceding June 1 and be equal to--
            ``(A) the bond equivalent rate of 91-day Treasury bills 
        auctioned at the final auction held prior to such June 1; plus
            ``(B) 3.10 percent,
    except that such rate shall not exceed 8.25 percent.
        ``(2) Consultation.--The Secretary shall determine the 
    applicable rate of interest under paragraph (1) after consultation 
    with the Secretary of the Treasury and shall publish such rate in 
    the Federal Register as soon as practicable after the date of 
    determination.
    ``(g) In School and Grace Period Rules.--
        ``(1) General rule.--Notwithstanding the provisions of 
    subsection (f), but subject to subsection (h), with respect to any 
    loan under section 428 or 428H of this part for which the first 
    disbursement is made on or after July 1, 1995, the applicable rate 
    of interest for interest which accrues--
            ``(A) prior to the beginning of the repayment period of the 
        loan; or
            ``(B) during the period in which principal need not be paid 
        (whether or not such principal is in fact paid) by reason of a 
        provision described in section 428(b)(1)(M) or 427(a)(2)(C),
    shall not exceed the rate determined under paragraph (2).
        ``(2) Rate determination.--For purposes of paragraph (1), the 
    rate determined under this paragraph shall, during any 12-month 
    period beginning on July 1 and ending on June 30, be determined on 
    the preceding June 1 and be equal to--
            ``(A) the bond equivalent rate of 91-day Treasury bills 
        auctioned at the final auction prior to such June 1; plus
            ``(B) 2.5 percent,
    except that such rate shall not exceed 8.25 percent.
        ``(3) Consultation.--The Secretary shall determine the 
    applicable rate of interest under this subsection after consultation 
    with the Secretary of the Treasury and shall publish such rate in 
    the Federal Register as soon as practicable after the date of 
    determination.
    ``(h) Interest Rates for New Loans After July 1, 1998.--
        ``(1) In general.--Notwithstanding subsections (a), (b), (d), 
    (e), (f), and (g) of this section, with respect to any loan made, 
    insured, or guaranteed under this part (other than a loan made 
    pursuant to sections 428B and 428C) for which the first disbursement 
    is made on or after July 1, 1998, the applicable rate of interest 
    shall, during any 12-month period beginning on July 1 and ending on 
    June 30, be determined on the preceding June 1 and be equal to--
            ``(A) the bond equivalent rate of the securities with a 
        comparable maturity as established by the Secretary; plus
            ``(B) 1.0 percent,
    except that such rate shall not exceed 8.25 percent.
        ``(2) Interest rates for new plus loans after july 1, 1998.--
    Notwithstanding subsections (a), (b), (d), (e), (f), and (g), with 
    respect to any loan made under section 428B for which the first 
    disbursement is made on or after July 1, 1998, paragraph (1) shall 
    be applied--
            ``(A) by substituting `2.1 percent' for `1.0 percent' in 
        subparagraph (B); and
            ``(B) by substituting `9.0 percent' for `8.25 percent' in 
        the matter following such subparagraph.
        ``(3) Consultation.--The Secretary shall determine the 
    applicable rate of interest under this subsection after consultation 
    with the Secretary of the Treasury and shall publish such rate in 
    the Federal Register as soon as practicable after the date of 
    determination.''.

SEC. 4102. REDUCTION IN LOAN FEES PAID BY STUDENTS.

    (a) Origination Fees.--Section 438 of the Act (20 U.S.C. 1087-1) is 
amended--
        (1) in the heading of subsection (c) by inserting ``From 
    Students'' after ``Origination Fees''; and
        (2) in subsection (c)--
            (A) in paragraph (2)--
                (i) by striking ``428A, 428B, 428C,'' and inserting 
            ``428C''; and
                (ii) by striking ``5 percent'' and inserting ``3.0 
            percent''; and
            (B) in paragraph (6), by striking ``5 percent'' and 
        inserting ``3.0 percent''.
    (b) Origination Fee; Insurance Premium for Unsubsidized Loans.--
Section 428H of the Act (20 U.S.C. 1078-8) is amended--
        (1) in subsection (f)--
            (A) in the subsection heading, by striking ``Insurance 
        Premium'' and inserting ``Origination Fee'';
            (B) in the heading of paragraph (1), by striking ``/
        insurance premium'';
            (C) in paragraph (1)--
                (i) by striking ``a combined origination fee and 
            insurance premium in the amount of 6.5 percent'' and 
            inserting ``an origination fee in the amount of 3.0 
            percent''; and
                (ii) by striking the second sentence;
            (D) in paragraph (2), by striking ``combined fee and 
        premium'' and inserting ``origination fee'';
            (E) in paragraph (3), by striking ``combined origination fee 
        and insurance premium'' and inserting ``origination fee'';
            (F) in paragraph (4)--
                (i) in the heading, by striking ``insurance premium'' 
            and inserting ``origination fee'';
                (ii) by striking ``combined origination fee and 
            insurance premiums'' and inserting ``origination fees''; and
                (iii) by striking ``and premiums to pay'' and inserting 
            ``to pay''; and
            (G) in paragraph (5)--
                (i) in the heading, by inserting ``origination fee and'' 
            before ``insurance''; and
                (ii) in the second sentence--

                    (I) by striking ``6.5 percent insurance premium'' 
                and inserting ``combined origination fee under this 
                subsection and the insurance premium under subsection 
                (h)''; and
                    (II) by inserting ``origination fee and'' before 
                ``insurance''; and

        (2) by adding at the end the following new subsection:
    ``(l) Insurance Premium.--Each State or nonprofit private 
institution or organization having an agreement with the Secretary under 
section 428(b)(1) may charge a borrower under this section an insurance 
premium equal to not more than 1.0 percent of the principal amount of 
the loan, if such premium will not be used for incentive payments to 
lenders.''.
    (c) Insurance Premium.--Section 428(b)(1)(H) of the Act (20 U.S.C. 
1078(b)(1)(H)) is amended by striking ``3 percent'' and inserting ``1.0 
percent''.
    (d) Effective Date.--The amendments made by this section shall take 
effect on July 1, 1994.

SEC. 4103. LOAN FEES FROM LENDERS.

    Section 438 of the Act (20 U.S.C 1087-1) is further amended--
        (1) by redesignating subsections (d) and (e) as subsections (e) 
    and (f), respectively; and
        (2) by inserting after subsection (c) the following new 
    subsection:
    ``(d) Loan Fees From Lenders.--
        ``(1) Deduction from interest and special allowance subsidies.--
    Notwithstanding subsection (b), the Secretary shall reduce the total 
    amount of interest and special allowance payable under section 
    428(a)(3)(A) and subsection (b) of this section, respectively, to 
    any holder of a loan by a loan fee in an amount determined in 
    accordance with paragraph (2) of this subsection. If the total 
    amount of interest and special allowance payable under section 
    428(a)(3)(A) and subsection (b) of this section, respectively, is 
    less than the amount of such loan fee, then the Secretary shall 
    deduct such excess amount from subsequent quarters' payments until 
    the total amount has been deducted.
        ``(2) Amount of loan fees.--With respect to any loan under this 
    part for which the first disbursement was made on or after October 
    1, 1993, the amount of the loan fee which shall be deducted under 
    paragraph (1) shall be equal to 0.50 percent of the principal amount 
    of the loan.
        ``(3) Distribution of loan fees.--The Secretary shall deposit 
    all fees collected pursuant to paragraph (3) into the insurance fund 
    established in section 431.''.

SEC. 4104. OFFSET FEE.

    Subsection (h) of section 439 of the Act (20 U.S.C. 1087-2(h)) is 
amended by adding at the end the following new paragraph:
        ``(7) Offset fee.--(A) The Association shall pay to the 
    Secretary, on a monthly basis, an offset fee calculated on an annual 
    basis in an amount equal to 0.30 percent of the principal amount of 
    each loan made, insured or guaranteed under this part that the 
    Association holds (except for loans made pursuant to sections 428C, 
    439(o), or 439(q)) and that was acquired on or after the date of 
    enactment of this paragraph.
        ``(B) If the Secretary determines that the Association has 
    substantially failed to comply with subsection (q), subparagraph (A) 
    shall be applied by substituting `1.0 percent' for `0.3 percent'.
        ``(C) The Secretary shall deposit all fees collected pursuant to 
    this paragraph into the insurance fund established in section 
    431.''.

SEC. 4105. ELIMINATION OF TAX EXEMPT FLOOR.

    Section 438(b)(2)(B) of the Act (20 U.S.C. 1087-1(b)(2)(B)) is 
amended by adding at the end the following new clause:
        ``(iv) Notwithstanding clauses (i) and (ii), the quarterly rate 
    of the special allowance for holders of loans which are financed 
    with funds obtained by the holder from the issuance of obligations 
    originally issued on or after October 1, 1993, the income from which 
    is excluded from gross income under the Internal Revenue Code of 
    1986, shall be the quarterly rate of the special allowance 
    established under subparagraph (A), (E), or (F), as the case may be. 
    Such rate shall also apply to holders of loans which were made or 
    purchased with funds obtained by the holder from collections or 
    default reimbursements on, or interest or other income pertaining 
    to, eligible loans made or purchased with funds described in the 
    preceding sentence of this subparagraph or from income on the 
    investment of such funds.''.
SEC. 4106. REDUCTION IN INTEREST RATE FOR CONSOLIDATION LOANS; REBATE 
FEE.
    (a) Amendment.--Section 428C of the Act (20 U.S.C. 1078-3) is 
amended by adding at the end the following new subsection:
    ``(f) Interest Payment Rebate Fee.--
        ``(1) In general.--For any month beginning on or after October 
    1, 1993, each holder of a consolidation loan under this section for 
    which the first disbursement was made on or after October 1, 1993, 
    shall pay to the Secretary, on a monthly basis and in such manner as 
    the Secretary shall prescribe, a rebate fee calculated on an annual 
    basis equal to 1.05 percent of the principal plus accrued unpaid 
    interest on such loan.
        ``(2) Deposit.--The Secretary shall deposit all fees collected 
    pursuant to subsection (a) into the insurance fund established in 
    section 431.''.
    (b) Enforcement.--Subsection (d) of section 435 of the Act (20 
U.S.C. 1085(d)) is amended--
        (1) in the matter preceding subparagraph (A) of paragraph (1), 
    by striking ``(5)'' and inserting ``(6)''; and
        (2) by adding at the end the following new paragraph:
        ``(6) Rebate fee requirement.--To be an eligible lender under 
    this part, an eligible lender shall pay rebate fees in accordance 
    with section 428C(f).''.
SEC. 4107. REINSURANCE FEES AND ADMINISTRATIVE COST ALLOWANCE.
    (a) Reinsurance Fees.--Section 428(c) of the Act (20 U.S.C. 1078(c)) 
is amended--
        (1) by striking paragraph (9); and
        (2) by redesignating paragraph (10) as paragraph (9).
    (b) Administrative Cost Allowance.--Section 428(f)(1) of the Act (20 
U.S.C. 1078(f)(1)) is amended--
        (1) in subparagraph (A), by striking ``The Secretary'' and 
    inserting ``For a fiscal year prior to fiscal year 1994, the 
    Secretary''; and
        (2) in subparagraph (B), by inserting ``prior to fiscal year 
    1994'' after ``any fiscal year''.
    (c) Effective Date.--The amendments made by this section shall take 
effect on October 1, 1993.

SEC. 4108. RISK SHARING.

    (a) Guaranty Agency Reinsurance Percentage.--Section 428(c)(1) of 
the Act (20 U.S.C. 1078(c)(1)) is amended--
        (1) in the fourth sentence of subparagraph (A), by striking 
    ``100 percent'' and inserting ``98 percent'';
        (2) in subparagraph (B)(i), by striking ``90 percent'' and 
    inserting ``88 percent'';
        (3) in subparagraph (B)(ii), by striking ``80 percent'' and 
    inserting ``78 percent''; and
        (4) by adding at the end the following new subparagraphs:
        ``(E) Notwithstanding any other provisions of this section, in 
    the case of a loan made pursuant to a lender-of-last-resort program, 
    the Secretary shall apply the provisions of--
            ``(i) the fourth sentence of subparagraph (A) by 
        substituting `100 percent' for `98 percent';
            ``(ii) subparagraph (B)(i) by substituting `100 percent' for 
        `88 percent'; and
            ``(iii) subparagraph (B)(ii) by substituting `100 percent' 
        for `78 percent'.
        ``(F) Notwithstanding any other provisions of this section, in 
    the case of an outstanding loan transferred to a guaranty agency 
    from another guaranty agency pursuant to a plan approved by the 
    Secretary in response to the insolvency of the latter such guarantee 
    agency, the Secretary shall apply the provision of--
            ``(i) the fourth sentence of subparagraph (A) by 
        substituting `100 percent' for `98 percent';
            ``(ii) subparagraph (B)(i) by substituting `90 percent' for 
        `88 percent'; and
            ``(iii) subparagraph (B)(ii) by substituting `80 percent' 
        for `78 percent'.''.
    (b) Risk Sharing by the Loan Holders.--Section 428(b)(1)(G) of the 
Act (20 U.S.C. 1078(b)(1)(G)) is amended--
        (1) by striking ``100 percent'' and inserting ``98 percent''; 
    and
        (2) by adding before the semicolon at the end the following: ``, 
    except that such program shall insure 100 percent of the unpaid 
    principal of loans made with funds advanced pursuant to section 
    428(j) or 439(q)''.
    (c) Effective Date.--The amendments made by this section shall apply 
to any loan for which the first disbursement is made on or after October 
1, 1993.

SEC. 4109. PLUS LOAN DISBURSEMENTS.

    (a) Multiple Disbursement Required.--The matter preceding paragraph 
(1) of section 428B(c) of the Act (20 U.S.C. 1078-2(c)) is amended by 
inserting ``shall be disbursed in accordance with the requirements of 
section 428G and'' after ``under this section''.
    (b) Conforming Amendments.--Section 428G(e) of the Act (20 U.S.C. 
1078-7(e) is amended--
        (1) in the subsection heading, by striking ``PLUS, 
    Consolidation,'' and inserting ``Consolidation''; and
        (2) by striking ``section 428B or 428C'' and inserting ``section 
    428C''.
    (c) Effective Date.--The amendments made by this section shall be 
effective with respect to loans for which the first disbursement is made 
on or after October 1, 1993.

SEC. 4110. SECRETARY'S EQUITABLE SHARE.

    (a) Amendment.--Section 428(c)(6)(A)(ii) of the Act (20 U.S.C. 
1078(c)(6)(A)(ii)) is amended by striking ``30 percent'' and inserting 
``27 percent''.
    (b) Effective Date.--The amendment made by subsection (a) shall take 
effect on October 1, 1993.
SEC. 4111. REDUCTION IN THE SPECIAL ALLOWANCE PAYMENT.
    Paragraph (2) of section 438(b) of the Act (20 U.S.C. 1087-1(b)(2)) 
is amended--
        (1) in subparagraph (A)--
            (A) by striking ``and (D)'' and inserting ``(D), (E), and 
        (F)''; and
            (B) by striking ``427A(e)'' and inserting ``427A(f)''; and
        (2) by adding at the end the following new subparagraphs:
        ``(E) In the case of any loan for which the applicable rate of 
    interest is described in section 427A(g)(2), subparagraph (A)(iii) 
    shall be applied by substituting `2.5 percent' for `3.10 percent'.
        ``(F) Subject to paragraph (4), the special allowance paid 
    pursuant to this subsection on loans for which the applicable rate 
    of interest is determined under section 427A(h) shall be computed 
    (i) by determining the applicable bond equivalent rate of the 
    security with a comparable maturity, as established by the 
    Secretary, (ii) by subtracting the applicable interest rates on such 
    loans from such applicable bond equivalent rate, (iii) by adding 1.0 
    percent to the resultant percent, and (iv) by dividing the resultant 
    percent by 4. If such computation produces a number less than zero, 
    such loans shall be subject to section 427A(f).''.

SEC. 4112. SUPPLEMENTAL PRECLAIMS ASSISTANCE.

    (a) Amendment.--Section 428(l)(2) of the Act (20 U.S.C. 1078(l)(2)) 
is amended by striking the second sentence and inserting the following: 
``For each loan on which such assistance is performed and for which a 
default claim is not presented to the guaranty agency by the lender on 
or before the 150th day after the loan becomes 120 days delinquent, such 
payment shall be equal to one percent of the total of the unpaid 
principal and the accrued unpaid interest of the loan.''.
    (b) Effective Date.--The amendment made by this section shall take 
effect on October 1, 1993.
                   Subtitle C--Cost Sharing by States

SEC. 4201. COST SHARING BY STATES.

    (a) Amendment.--Section 428 of the Act (20 U.S.C. 1078) is amended 
by adding at the end the following new subsection:
    ``(n) State Share of Default Costs.--
        ``(1) In general.--In the case of any State in which there are 
    located any institutions of higher education that have a cohort 
    default rate that exceeds 20 percent, such State shall pay to the 
    Secretary an amount equal to--
            ``(A) the new loan volume attributable to all institutions 
        in the State for the current fiscal year; multiplied by
            ``(B) the percentage specified in paragraph (2); multiplied 
        by
            ``(C) the quotient of--
                ``(i) the sum of the amounts calculated under paragraph 
            (3) for each such institution in the State; divided by
                ``(ii) the total amount of loan volume attributable to 
            current and former students of institutions located in that 
            State entering repayment in the period used to calculate the 
            cohort default rate.
        ``(2) Percentage.--For purposes of paragraph (1)(B), the 
    percentage used shall be--
            ``(A) 12.5 percent for fiscal year 1995;
            ``(B) 20 percent for fiscal year 1996; and
            ``(C) 50 percent for fiscal year 1997 and succeeding fiscal 
        years.
        ``(3) Calculation.--For purposes of paragraph (1)(C)(i), the 
    amount shall be determined by calculating for each institution the 
    amount by which--
            ``(A) the amount of the loans received for attendance by 
        such institution's current and former students who (i) enter 
        repayment during the fiscal year used for the calculation of the 
        cohort default rate, and (ii) default before the end of the 
        following fiscal year; exceeds
            ``(B) 20 percent of the loans received for attendance by all 
        the current and former students who enter repayment during the 
        fiscal year used for the calculation of the cohort default rate.
        ``(4) Fee.--A State may charge a fee to an institution of higher 
    education that participates in the program under this part and is 
    located in that State according to a fee structure, approved by the 
    Secretary, that is based on the institution's cohort default rate 
    and the State's risk of loss under this subsection. Such fee 
    structure shall include a process by which an institution with a 
    high cohort default rate is exempt from any fees under this 
    paragraph if such institution demonstrates to the satisfaction of 
    the State that exceptional mitigating circumstances, as determined 
    by the State and approved by the Secretary, contributed to its 
    cohort default rate.''.
    (b) Effective Date.--The amendment made by this section shall take 
effect on October 1, 1994.
                     Subtitle D--Group Health Plans
SEC. 4301. STANDARDS FOR GROUP HEALTH PLAN COVERAGE.
    (a) In General.--Part 6 of subtitle B of title I of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1161 et seq.) is 
amended by adding at the end the following new section:


               ``additional standards for group health plans

    ``Sec. 609. (a) Group Health Plan Coverage Pursuant to Medical Child 
Support Orders.--
        ``(1) In general.--Each group health plan shall provide benefits 
    in accordance with the applicable requirements of any qualified 
    medical child support order.
        ``(2) Definitions.--For purposes of this subsection--
            ``(A) Qualified medical child support order.--The term 
        `qualified medical child support order' means a medical child 
        support order--
                ``(i) which creates or recognizes the existence of an 
            alternate recipient's right to, or assigns to an alternate 
            recipient the right to, receive benefits for which a 
            participant or beneficiary is eligible under a group health 
            plan, and
                ``(ii) with respect to which the requirements of 
            paragraphs (3) and (4) are met.
            ``(B) Medical child support order.--The term `medical child 
        support order' means any judgment, decree, or order (including 
        approval of a settlement agreement) issued by a court of 
        competent jurisdiction which--
                ``(i) provides for child support with respect to a child 
            of a participant under a group health plan or provides for 
            health benefit coverage to such a child, is made pursuant to 
            a State domestic relations law (including a community 
            property law), and relates to benefits under such plan, or
                ``(ii) enforces a law relating to medical child support 
            described in section 1908 of the Social Security Act (as 
            added by section 13822 of the Omnibus Budget Reconciliation 
            Act of 1993) with respect to a group health plan.
            ``(C) Alternate recipient.--The term `alternate recipient' 
        means any child of a participant who is recognized under a 
        medical child support order as having a right to enrollment 
        under a group health plan with respect to such participant.
        ``(3) Information to be included in qualified order.--A medical 
    child support order meets the requirements of this paragraph only if 
    such order clearly specifies--
            ``(A) the name and the last known mailing address (if any) 
        of the participant and the name and mailing address of each 
        alternate recipient covered by the order,
            ``(B) a reasonable description of the type of coverage to be 
        provided by the plan to each such alternate recipient, or the 
        manner in which such type of coverage is to be determined,
            ``(C) the period to which such order applies, and
            ``(D) each plan to which such order applies.
        ``(4) Restriction on new types or forms of benefits.--A medical 
    child support order meets the requirements of this paragraph only if 
    such order does not require a plan to provide any type or form of 
    benefit, or any option, not otherwise provided under the plan, 
    except to the extent necessary to meet the requirements of a law 
    relating to medical child support described in section 1908 of the 
    Social Security Act (as added by section 13822 of the Omnibus Budget 
    Reconciliation Act of 1993).
        ``(5) Procedural requirements.--
            ``(A) Timely notifications and determinations.--In the case 
        of any medical child support order received by a group health 
        plan--
                ``(i) the plan administrator shall promptly notify the 
            participant and each alternate recipient of the receipt of 
            such order and the plan's procedures for determining whether 
            medical child support orders are qualified medical child 
            support orders, and
                ``(ii) within a reasonable period after receipt of such 
            order, the plan administrator shall determine whether such 
            order is a qualified medical child support order and notify 
            the participant and each alternate recipient of such 
            determination.
            ``(B) Establishment of procedures for determining qualified 
        status of orders.--Each group health plan shall establish 
        reasonable procedures to determine whether medical child support 
        orders are qualified medical child support orders and to 
        administer the provision of benefits under such qualified 
        orders. Such procedures--
                ``(i) shall be in writing,
                ``(ii) shall provide for the notification of each person 
            specified in a medical child support order as eligible to 
            receive benefits under the plan (at the address included in 
            the medical child support order) of such procedures promptly 
            upon receipt by the plan of the medical child support order, 
            and
                ``(iii) shall permit an alternate recipient to designate 
            a representative for receipt of copies of notices that are 
            sent to the alternate recipient with respect to a medical 
            child support order.
        ``(6) Actions taken by fiduciaries.--If a plan fiduciary acts in 
    accordance with part 4 of this subtitle in treating a medical child 
    support order as being (or not being) a qualified medical child 
    support order, then the plan's obligation to the participant and 
    each alternate recipient shall be discharged to the extent of any 
    payment made pursuant to such act of the fiduciary.
        ``(7) Treatment of alternate recipients.--
            ``(A) Treatment as beneficiary generally.--A person who is 
        an alternate recipient under a qualified medical child support 
        order shall be considered a beneficiary under the plan for 
        purposes of any provision of this Act.
            ``(B) Treatment as participant for purposes of reporting and 
        disclosure requirements.--A person who is an alternate recipient 
        under any medical child support order shall be considered a 
        participant under the plan for purposes of the reporting and 
        disclosure requirements of part 1.
        ``(8) Direct provision of benefits provided to alternate 
    recipients.--Any payment for benefits made by a group health plan 
    pursuant to a medical child support order in reimbursement for 
    expenses paid by an alternate recipient or an alternate recipient's 
    custodial parent or legal guardian shall be made to the alternate 
    recipient or the alternate recipient's custodial parent or legal 
    guardian.
    ``(b) Rights of States with Respect to Group Health Plans Where 
Participants or Beneficiaries Thereunder Are Eligible for Medicaid 
Benefits.--
        ``(1) Compliance by plans with assignment of rights.--A group 
    health plan shall provide that payment for benefits with respect to 
    a participant under the plan will be made in accordance with any 
    assignment of rights made by or on behalf of such participant or a 
    beneficiary of the participant as required by a State plan for 
    medical assistance approved under title XIX of the Social Security 
    Act pursuant to section 1912(a)(1)(A) of such Act (as in effect on 
    the date of the enactment of the Omnibus Budget Reconciliation Act 
    of 1993).
        ``(2) Enrollment and provision of benefits without regard to 
    medicaid eligibility.--A group health plan shall provide that, in 
    enrolling an individual as a participant or beneficiary or in 
    determining or making any payments for benefits of an individual as 
    a participant or beneficiary, the fact that the individual is 
    eligible for or is provided medical assistance under a State plan 
    for medical assistance approved under title XIX of the Social 
    Security Act will not be taken into account.
        ``(3) Acquisition by states of rights of third parties.--A group 
    health plan shall provide that, to the extent that payment has been 
    made under a State plan for medical assistance approved under title 
    XIX of the Social Security Act in any case in which a group health 
    plan has a legal liability to make payment for items or services 
    constituting such assistance, payment for benefits under the plan 
    will be made in accordance with any State law which provides that 
    the State has acquired the rights with respect to a participant to 
    such payment for such items or services.
    ``(c) Group Health Plan Coverage of Dependent Children in Cases of 
Adoption.--
        ``(1) Coverage effective upon placement for adoption.--In any 
    case in which a group health plan provides coverage for dependent 
    children of participants or beneficiaries, such plan shall provide 
    benefits to dependent children placed with participants or 
    beneficiaries for adoption under the same terms and conditions as 
    apply in the case of dependent children who are natural children of 
    participants or beneficiaries under the plan, irrespective of 
    whether the adoption has become final.
        ``(2) Restrictions based on preexisting conditions at time of 
    placement for adoption prohibited.--A group health plan may not 
    restrict coverage under the plan of any dependent child adopted by a 
    participant or beneficiary, or placed with a participant or 
    beneficiary for adoption, solely on the basis of a preexisting 
    condition of such child at the time that such child would otherwise 
    become eligible for coverage under the plan, if the adoption or 
    placement for adoption occurs while the participant or beneficiary 
    is eligible for coverage under the plan.
        ``(3) Definitions.--For purposes of this subsection--
            ``(A) Child.--The term `child' means, in connection with any 
        adoption, or placement for adoption, of the child, an individual 
        who has not attained age 18 as of the date of such adoption or 
        placement for adoption.
            ``(B) Placement for adoption.--The term `placement', or 
        being `placed', for adoption, in connection with any placement 
        for adoption of a child with any person, means the assumption 
        and retention by such person of a legal obligation for total or 
        partial support of such child in anticipation of adoption of 
        such child. The child's placement with such person terminates 
        upon the termination of such legal obligation.
    ``(d) Continued Coverage of Costs of a Pediatric Vaccine Under Group 
Health Plans.--A group health plan may not reduce its coverage of the 
costs of pediatric vaccines (as defined under section 1928(h)(6) of the 
Social Security Act as amended by section 13830 of the Omnibus Budget 
Reconciliation Act of 1993) below the coverage it provided as of May 1, 
1993.
    ``(e) Regulations.--Any regulations prescribed under this section 
shall be prescribed by the Secretary of Labor, in consultation with the 
Secretary of Health and Human Services.''.
    (b) Conforming Amendments to ERISA To Ensure Compliance With 
Medicare and Medicaid Coverage Data Bank Requirements.--
        (1) Reports to data bank.--Section 101 of the Employee 
    Retirement Income Security Act of 1974 (29 U.S.C. 1021) is amended--
            (A) by redesignating subsection (f) as subsection (g); and
            (B) by inserting after subsection (e) the following new 
        subsection:
    ``(f) Information Necessary To Comply With Medicare and Medicaid 
Coverage Data Bank Requirements.--
        ``(1) Provision of information by group health plan upon request 
    of employer.--
            ``(A) In general.--An employer shall comply with the 
        applicable requirements of section 1144 of the Social Security 
        Act (as added by section 13581 of the Omnibus Budget 
        Reconciliation Act of 1993). Upon the request of an employer 
        maintaining a group health plan, any plan sponsor, plan 
        administrator, insurer, third-party administrator, or other 
        person who maintains under the plan the information necessary to 
        enable the employer to comply with the applicable requirements 
        of section 1144 of the Social Security Act shall, in such form 
        and manner as may be prescribed in regulations of the Secretary 
        (in consultation with the Secretary of Health and Human 
        Services), provide such information (not inconsistent with 
        paragraph (2))--
                ``(i) in the case of a request by an employer described 
            in subparagraph (B) and a plan that is not a multiemployer 
            plan or a component of an arrangement described in 
            subparagraph (C), to the Medicare and Medicaid Coverage Data 
            Bank;
                ``(ii) in the case of a plan that is a multiemployer 
            plan or is a component of an arrangement described in 
            subparagraph (C), to the employer or to such Data Bank, at 
            the option of the plan; and
                ``(iii) in any other case, to the employer or to such 
            Data Bank, at the option of the employer.
            ``(B) Employer described.--An employer is described in this 
        subparagraph for any calendar year if such employer normally 
        employed fewer than 50 employees on a typical business day 
        during such calendar year.
            ``(C) Arrangement described.--An arrangement described in 
        this subparagraph is any arrangement in which two or more 
        employers contribute for the purpose of providing group health 
        plan coverage for employees.
        ``(2) Information not required to be provided.--Any plan 
    sponsor, plan administrator, insurer, third-party administrator, or 
    other person described in paragraph (1)(A) (other than the employer) 
    that maintains the information under the plan shall not provide to 
    an employer in order to satisfy the requirements of section 1144 of 
    the Social Security Act, and shall not provide to the Data Bank 
    under such section, information that pertains in any way to--
            ``(A) the health status of a participant, or of the 
        participant's spouse, dependent child, or other beneficiary,
            ``(B) the cost of coverage provided to any participant or 
        beneficiary, or
            ``(C) any limitations on such coverage specific to any 
        participant or beneficiary.
        ``(3) Regulations.--The Secretary may, in consultation with the 
    Secretary of Health and Human Services, prescribe such regulations 
    as are necessary to carry out this subsection.''.
    (c) Conforming Amendments.--
        (1) Civil actions.--Section 502(a) of such Act (29 U.S.C. 
    1132(a)) is amended--
            (A) in paragraph (5), by striking ``or'' at the end;
            (B) in paragraph (6), by striking the period and inserting a 
        semicolon; and
            (C) by adding at the end the following new paragraphs:
        ``(7) by a State to enforce compliance with a qualified medical 
    child support order (as defined in section 609(a)(2)(A)); or
        ``(8) by the Secretary, or by an employer or other person 
    referred to in section 101(f)(1), (A) to enjoin any act or practice 
    which violates subsection (f) of section 101, or (B) to obtain 
    appropriate equitable relief (i) to redress such violation or (ii) 
    to enforce such subsection.''.
        (2) Civil penalty.--Section 502(c) of such Act (29 U.S.C. 
    1132(c)) is amended by adding at the end the following new 
    paragraph:
    ``(4) The Secretary may assess a civil penalty of not more than 
$1,000 for each violation by any person of section 101(f)(1). For 
purposes of this paragraph, each violation described in subparagraph (A) 
with respect to any single participant, and each violation described in 
subparagraph (B) with respect to any single participant or beneficiary, 
shall be treated as a separate violation. The Secretary and the 
Secretary of Health and Human Services shall maintain such ongoing 
consultation as may be necessary and appropriate to coordinate 
enforcement under this subsection with enforcement under section 
1144(c)(8) of the Social Security Act.''.
        (3) Jurisdiction.--Section 502(e)(1) of such Act (29 U.S.C. 
    1132(e)(1)) is amended--
            (A) in the first sentence, by striking ``or fiduciary'' and 
        inserting ``fiduciary, or any person referred to in section 
        101(f)(1)''; and
            (B) in the second sentence, by striking ``subsection 
        (a)(1)(B)'' and inserting ``paragraphs (1)(B) and (7) of 
        subsection (a)''.
        (4) Effect on other laws.--Section 514 of such Act (29 U.S.C. 
    1144) is amended--
            (A) in subsection (b)(7)(D), by inserting ``, qualified 
        medical child support orders (within the meaning of section 
        609(a)(2)(A)), and the provisions of law referred to in section 
        609(a)(2)(B)(ii) to the extent enforced by qualified medical 
        child support orders'' before the period; and
            (B) by striking subsection (b)(8) and inserting the 
        following:
    ``(8) Subsection (a) of this section shall not be construed to 
preclude any State cause of action--
        ``(A) with respect to which the State exercises its acquired 
    rights under section 609(b)(3) with respect to a group health plan 
    (as defined in section 607(1)), or
        ``(B) for recoupment of payment with respect to items or 
    services pursuant to a State plan for medical assistance approved 
    under title XIX of the Social Security Act which would not have been 
    payable if such acquired rights had been executed before payment 
    with respect to such items or services by the group health plan.'';
        (5) Clerical amendments.--
            (A) The heading for part 6 of subtitle B of title I of such 
        Act is amended to read as follows:

                     ``Part 6--Group Health Plans''.

            (B) The table of contents in section 1 of such Act is 
        amended--
                (i) by striking the item relating to the heading for 
            part 6 of subtitle B of title I and inserting the following:

                     ``Part 6--Group Health Plans'';

            and
                (ii) by inserting after the item relating to section 608 
            the following new item:
``Sec. 609. Additional standards for group health plans.''.

    (d) Effective Date.--
        (1) In general.--The amendments made by this section shall take 
    effect on the date of the enactment of this Act.
        (2) Plan amendments not required until january 1, 1994.--Any 
    amendment to a plan required to be made by an amendment made by this 
    section shall not be required to be made before the first plan year 
    beginning on or after January 1, 1994, if--
            (A) during the period after the date before the date of the 
        enactment of this Act and before such first plan year, the plan 
        is operated in accordance with the requirements of the 
        amendments made by this section, and
            (B) such plan amendment applies retroactively to the period 
        after the date before the date of the enactment of this Act and 
        before such first plan year.
    A plan shall not be treated as failing to be operated in accordance 
    with the provisions of the plan merely because it operates in 
    accordance with this paragraph.
                        Subtitle E--Fee Increase

SEC. 4401. FEE INCREASE.

    The Tea Importation Act (21 U.S.C. 41 et seq.) is amended--
        (1) by inserting the 4th undesignated paragraph under the center 
    heading ``food and drug administration'' of title II of the Labor-
    Federal Security Appropriation Act, 1942 (21 U.S.C. 46a) as a new 
    section 13 of the Tea Importation Act, and
        (2) by amending such new section 13 to read as follows:
    ``Sec. 13. No tea or merchandise described as tea shall be examined 
for importation into the United States, or released by the Customs 
Service, under the Tea Importation Act unless the importer or consignee 
of such tea or merchandise has paid, before the examination, a fee in an 
amount equal to--
        ``(1) 10 cents for each hundred weight or fraction thereof of 
    the tea or merchandise; or
        ``(2) the approximate cost of the examinations;
whichever amount is less. Such fee shall be deposited into the Treasury 
of the United States as miscellaneous receipts.''
           TITLE V--TRANSPORTATION AND PUBLIC WORKS PROVISIONS

SEC. 5001. RECREATIONAL USER FEES.

    (a) In General.--Section 210 of the Flood Control Act of 1968 (16 
U.S.C. 460d-3) is amended--
        (1) by striking ``Sec. 210. No entrance'' and inserting the 
    following:

``SEC. 210. RECREATIONAL USER FEES.

    ``(a) Prohibition on Admissions Fees.--No entrance'';
        (2) by striking the second sentence; and
        (3) by adding at the end the following new subsection:
    ``(b) Fees for Use of Developed Recreation Sites and Facilities.--
        ``(1) Establishment and collection.--Notwithstanding section 
    4(b) of the Land and Water Conservation Fund Act of 1965 (16 U.S.C. 
    460l-6a(b)), the Secretary of the Army is authorized, subject to 
    paragraphs (2) and (3), to establish and collect fees for the use of 
    developed recreation sites and facilities, including campsites, 
    swimming beaches, and boat launching ramps but excluding a site or 
    facility which includes only a boat launch ramp and a courtesy dock.
        ``(2) Exemption of certain facilities.--The Secretary shall not 
    establish or collect fees under this subsection for the use or 
    provision of drinking water, wayside exhibits, roads, scenic drives, 
    overlook sites, picnic tables, toilet facilities, surface water 
    areas, undeveloped or lightly developed shoreland, or general 
    visitor information.
        ``(3) Per vehicle limit.--The fee under this subsection for use 
    of a site or facility (other than an overnight camping site or 
    facility or any other site or facility at which a fee is charged for 
    use of the site or facility as of the date of the enactment of this 
    paragraph) for persons entering the site or facility by private, 
    noncommercial vehicle transporting not more than 8 persons 
    (including the driver) shall not exceed $3 per day per vehicle. Such 
    maximum amount may be adjusted annually by the Secretary for changes 
    in the Consumer Price Index of All Urban Consumers published by the 
    Bureau of Labor Statistics of the Department of Labor.
        ``(4) Deposit into treasury account.--All fees collected under 
    this subsection shall be deposited into the Treasury account for the 
    Corps of Engineers established by section 4(i) of the Land and Water 
    Conservation Fund Act of 1965 (16 U.S.C. 460l-6a(i)).''.
    (b) Conforming Amendment for Campsites.--Section 4(b) of the Land 
and Water Conservation Fund Act of 1965 (16 U.S.C. 460l-6a(b)) is 
amended by striking the next to the last sentence.
 TITLE VI--COMMUNICATIONS LICENSING AND SPECTRUM ALLOCATION IMPROVEMENT

SEC. 6001. TRANSFER OF AUCTIONABLE FREQUENCIES.

    (a) Amendment.--The National Telecommunications and Information 
Administration Organization Act (47 U.S.C. 901 et seq.) is amended--
        (1) by striking the heading of part B and inserting the 
    following:

              ``PART C--SPECIAL AND TEMPORARY PROVISIONS'';

        (2) by redesignating sections 131 through 135 as sections 151 
    through 155, respectively; and
        (3) by inserting after part A the following new part:

             ``PART B--TRANSFER OF AUCTIONABLE FREQUENCIES.

``SEC. 111. DEFINITIONS.

    ``As used in this part:
        ``(1) The term `allocation' means an entry in the National Table 
    of Frequency Allocations of a given frequency band for the purpose 
    of its use by one or more radiocommunication services.
        ``(2) The term `assignment' means an authorization given to a 
    station licensee to use specific frequencies or channels.
        ``(3) The term `the 1934 Act' means the Communications Act of 
    1934 (47 U.S.C. 151 et seq.).

``SEC. 112. NATIONAL SPECTRUM ALLOCATION PLANNING.

    ``The Assistant Secretary and the Chairman of the Commission shall 
meet, at least biannually, to conduct joint spectrum planning with 
respect to the following issues:
        ``(1) the extent to which licenses for spectrum use can be 
    issued pursuant to section 309(j) of the 1934 Act to increase 
    Federal revenues;
        ``(2) the future spectrum requirements for public and private 
    uses, including State and local government public safety agencies;
        ``(3) the spectrum allocation actions necessary to accommodate 
    those uses; and
        ``(4) actions necessary to promote the efficient use of the 
    spectrum, including spectrum management techniques to promote 
    increased shared use of the spectrum that does not cause harmful 
    interference as a means of increasing commercial access.
``SEC. 113. IDENTIFICATION OF REALLOCABLE FREQUENCIES.
    ``(a) Identification Required.--The Secretary shall, within 18 
months after the date of the enactment of the Omnibus Budget 
Reconciliation Act of 1993, prepare and submit to the President and the 
Congress a report identifying and recommending for reallocation bands of 
frequencies--
        ``(1) that are allocated on a primary basis for Federal 
    Government use;
        ``(2) that are not required for the present or identifiable 
    future needs of the Federal Government;
        ``(3) that can feasibly be made available, as of the date of 
    submission of the report or at any time during the next 15 years, 
    for use under the 1934 Act (other than for Federal Government 
    stations under section 305 of the 1934 Act);
        ``(4) the transfer of which (from Federal Government use) will 
    not result in costs to the Federal Government, or losses of services 
    or benefits to the public, that are excessive in relation to the 
    benefits to the public that may be provided by non-Federal 
    licensees; and
        ``(5) that are most likely to have the greatest potential for 
    productive uses and public benefits under the 1934 Act if allocated 
    for non-Federal use.
    ``(b) Minimum Amount of Spectrum Recommended.--
        ``(1) In general.--In accordance with the provisions of this 
    section, the Secretary shall recommend for reallocation, for use 
    other than by Federal Government stations under section 305 of the 
    1934 Act (47 U.S.C. 305), bands of frequencies that in the aggregate 
    span not less than 200 megahertz, that are located below 5 
    gigahertz, and that meet the criteria specified in paragraphs (1) 
    through (5) of subsection (a). Such bands of frequencies shall 
    include bands of frequencies, located below 3 gigahertz, that span 
    in the aggregate not less than 100 megahertz.
        ``(2) Mixed uses permitted to be counted.--Bands of frequencies 
    which a report of the Secretary under subsection (a) or (d)(1) 
    recommends be partially retained for use by Federal Government 
    stations, but which are also recommended to be reallocated to be 
    made available under the 1934 Act for use by non-Federal stations, 
    may be counted toward the minimum spectrum required by paragraph (1) 
    of this subsection, except that--
            ``(A) the bands of frequencies counted under this paragraph 
        may not count toward more than one-half of the minimums required 
        by paragraph (1) of this subsection;
            ``(B) a band of frequencies may not be counted under this 
        paragraph unless the assignments of the band to Federal 
        Government stations under section 305 of the 1934 Act (47 U.S.C. 
        305) are limited by geographic area, by time, or by other means 
        so as to guarantee that the potential use to be made by such 
        Federal Government stations is substantially less (as measured 
        by geographic area, time, or otherwise) than the potential use 
        to be made by non-Federal stations; and
            ``(C) the operational sharing permitted under this paragraph 
        shall be subject to the interference regulations prescribed by 
        the Commission pursuant to section 305(a) of the 1934 Act and to 
        coordination procedures that the Commission and the Secretary 
        shall jointly establish and implement to ensure against harmful 
        interference.
    ``(c) Criteria for Identification.--
        ``(1) Needs of the federal government.--In determining whether a 
    band of frequencies meets the criteria specified in subsection 
    (a)(2), the Secretary shall--
            ``(A) consider whether the band of frequencies is used to 
        provide a communications service that is or could be available 
        from a commercial provider or other vendor;
            ``(B) seek to promote--
                ``(i) the maximum practicable reliance on commercially 
            available substitutes;
                ``(ii) the sharing of frequencies (as permitted under 
            subsection (b)(2));
                ``(iii) the development and use of new communications 
            technologies; and
                ``(iv) the use of nonradiating communications systems 
            where practicable; and
            ``(C) seek to avoid--
                ``(i) serious degradation of Federal Government services 
            and operations;
                ``(ii) excessive costs to the Federal Government and 
            users of Federal Government services; and
                ``(iii) excessive disruption of existing use of Federal 
            Government frequencies by amateur radio licensees.
        ``(2) Feasibility of use.--In determining whether a frequency 
    band meets the criteria specified in subsection (a)(3), the 
    Secretary shall--
            ``(A) assume that the frequency will be assigned by the 
        Commission under section 303 of the 1934 Act (47 U.S.C. 303) 
        within 15 years;
            ``(B) assume reasonable rates of scientific progress and 
        growth of demand for telecommunications services;
            ``(C) seek to include frequencies which can be used to 
        stimulate the development of new technologies; and
            ``(D) consider the immediate and recurring costs to 
        reestablish services displaced by the reallocation of spectrum.
        ``(3) Analysis of benefits.--In determining whether a band of 
    frequencies meets the criteria specified in subsection (a)(5), the 
    Secretary shall consider--
            ``(A) the extent to which equipment is or will be available 
        that is capable of utilizing the band;
            ``(B) the proximity of frequencies that are already assigned 
        for commercial or other non-Federal use;
            ``(C) the extent to which, in general, commercial users 
        could share the frequency with amateur radio licensees; and
            ``(D) the activities of foreign governments in making 
        frequencies available for experimentation or commercial 
        assignments in order to support their domestic manufacturers of 
        equipment.
        ``(4) Power agency frequencies.--
            ``(A) Applicability of criteria.--The criteria specified by 
        subsection (a) shall be deemed not to be met for any purpose 
        under this part with regard to any frequency assignment to, or 
        any frequency assignment used by, a Federal power agency for the 
        purpose of withdrawing that assignment.
            ``(B) Mixed use eligibility.--The frequencies assigned to 
        any Federal power agency may only be eligible for mixed use 
        under subsection (b)(2) in geographically separate areas, but in 
        those cases where a frequency is to be shared by an affected 
        Federal power agency and a non-Federal user, such use by the 
        non-Federal user shall not cause harmful interference to the 
        affected Federal power agency or adversely affect the 
        reliability of its power system.
            ``(C) Definition.--As used in this paragraph, the term 
        `Federal power agency' means the Tennessee Valley Authority, the 
        Bonneville Power Administration, the Western Area Power 
        Administration, the Southwestern Power Administration, the 
        Southeastern Power Administration, or the Alaska Power 
        Administration.
        ``(5) Limitation on reallocation.--None of the frequencies 
    recommended for reallocation in the reports required by this 
    subsection shall have been recommended, prior to the date of 
    enactment of the Omnibus Budget Reconciliation Act of 1993, for 
    reallocation to non-Federal use by international agreement.
    ``(d) Procedure for Identification of Reallocable Bands of 
Frequencies.--
        ``(1) Submission of preliminary identification to congress.--
    Within 6 months after the date of the enactment of the Omnibus 
    Budget Reconciliation Act of 1993, the Secretary shall prepare, make 
    publicly available, and submit to the President, the Congress, and 
    the Commission a report which makes a preliminary identification of 
    reallocable bands of frequencies which meet the criteria established 
    by this section.
        ``(2) Public comment.--The Secretary shall provide interested 
    persons with the opportunity to submit, within 90 days after the 
    date of its publication, written comment on the preliminary report 
    required by paragraph (1). The Secretary shall immediately transmit 
    a copy of any such comment to the Commission.
        ``(3) Comment and recommendations from commission.--The 
    Commission shall, within 90 days after the conclusion of the period 
    for comment provided pursuant to paragraph (2), submit to the 
    Secretary the Commission's analysis of such comments and the 
    Commission's recommendations for responses to such comments, 
    together with such other comments and recommendations as the 
    Commission deems appropriate.
        ``(4) Direct discussions.--The Secretary shall encourage and 
    provide opportunity for direct discussions among commercial 
    representatives and Federal Government users of the spectrum to aid 
    the Secretary in determining which frequencies to recommend for 
    reallocation. The Secretary shall provide notice to the public and 
    the Commission of any such discussions, including the name or names 
    of any businesses or other persons represented in such discussions. 
    A representative of the Commission (and of the Secretary at the 
    election of the Secretary) shall be permitted to attend any such 
    discussions. The Secretary shall provide the public and the 
    Commission with an opportunity to comment on the results of any such 
    discussions prior to the submission of the final report required by 
    subsection (a).
    ``(e) Timetable for Reallocation and Limitation.--
        ``(1) Timetable required.--The Secretary shall, as part of the 
    reports required by subsections (a) and (d)(1), include a timetable 
    that recommends effective dates by which the President shall 
    withdraw or limit assignments of the frequencies specified in such 
    reports.
        ``(2) Expedited reallocation.--
            ``(A) Required reallocation.--The Secretary shall, as part 
        of the report required by subsection (d)(1), specifically 
        identify and recommend for immediate reallocation bands of 
        frequencies that in the aggregate span not less than 50 
        megahertz, that meet the criteria described in subsection (a), 
        and that can be made available for reallocation immediately upon 
        issuance of the report required by subsection (d)(1). Such bands 
        of frequencies shall include bands of frequencies, located below 
        3 gigahertz, that in the aggregate span not less than 25 
        megahertz .
            ``(B) Permitted reallocation.--The Secretary may, as part of 
        such report, identify and recommend bands of frequencies for 
        immediate reallocation for a mixed use pursuant to subsection 
        (b)(2), but such bands of frequencies may not count toward the 
        minimums required by subparagraph (A).
        ``(3) Delayed effective dates.--In setting the recommended 
    delayed effective dates, the Secretary shall--
            ``(A) consider the need to reallocate bands of frequencies 
        as early as possible, taking into account the requirements of 
        paragraphs (1) and (2) of section 115(b);
            ``(B) be based on the useful remaining life of equipment 
        that has been purchased or contracted for to operate on 
        identified frequencies;
            ``(C) consider the need to coordinate frequency use with 
        other nations; and
            ``(D) take into account the relationship between the costs 
        to the Federal Government of changing to different frequencies 
        and the benefits that may be obtained from commercial and other 
        non-Federal uses of the reassigned frequencies.
``SEC. 114. WITHDRAWAL OR LIMITATION OF ASSIGNMENT TO FEDERAL GOVERNMENT 
STATIONS.
    ``(a) In General.--The President shall--
        ``(1) within 6 months after receipt of a report by the Secretary 
    under subsection (a) or (d)(1) of section 113, withdraw the 
    assignment to a Federal Government station of any frequency which 
    the report recommends for immediate reallocation;
        ``(2) within either such 6-month period, limit the assignment to 
    a Federal Government station of any frequency which the report 
    recommends be made immediately available for mixed use under section 
    113(b)(2);
        ``(3) by the delayed effective date recommended by the Secretary 
    under section 113(e) (except as provided in subsection (b)(4) of 
    this section), withdraw or limit the assignment to a Federal 
    Government station of any frequency which the report recommends be 
    reallocated or made available for mixed use on such delayed 
    effective date;
        ``(4) assign or reassign other frequencies to Federal Government 
    stations as necessary to adjust to such withdrawal or limitation of 
    assignments; and
        ``(5) transmit a notice and description to the Commission and 
    each House of Congress of the actions taken under this subsection.
    ``(b) Exceptions.--
        ``(1) Authority to substitute.--If the President determines that 
    a circumstance described in paragraph (2) exists, the President--
            ``(A) may substitute an alternative frequency or frequencies 
        for the frequency that is subject to such determination and 
        withdraw (or limit) the assignment of that alternative frequency 
        in the manner required by subsection (a); and
            ``(B) shall submit a statement of the reasons for taking the 
        action described in subparagraph (A) to the Commission, 
        Committee on Energy and Commerce of the House of 
        Representatives, and the Committee on Commerce, Science, and 
        Transportation of the Senate.
        ``(2) Grounds for substitution.--For purposes of paragraph (1), 
    the following circumstances are described in this paragraph:
            ``(A) the reassignment would seriously jeopardize the 
        national defense interests of the United States;
            ``(B) the frequency proposed for reassignment is uniquely 
        suited to meeting important governmental needs;
            ``(C) the reassignment would seriously jeopardize public 
        health or safety;
            ``(D) the reassignment will result in costs to the Federal 
        Government that are excessive in relation to the benefits that 
        may be obtained from commercial or other non-Federal uses of the 
        reassigned frequency; or
            ``(E) the reassignment will disrupt the existing use of a 
        Federal Government band of frequencies by amateur radio 
        licensees.
        ``(3) Criteria for substituted frequencies.--For purposes of 
    paragraph (1), a frequency may not be substituted for a frequency 
    identified and recommended by the report of the Secretary under 
    section 113(a) unless the substituted frequency also meets each of 
    the criteria specified by section 113(a).
        ``(4) Delays in implementation.--If the President determines 
    that any action cannot be completed by the delayed effective date 
    recommended by the Secretary pursuant to section 113(e), or that 
    such an action by such date would result in a frequency being unused 
    as a consequence of the Commission's plan under section 115, the 
    President may--
            ``(A) withdraw or limit the assignment to Federal Government 
        stations on a later date that is consistent with such plan, 
        except that the President shall notify each committee specified 
        in paragraph (1)(B) and the Commission of the reason that 
        withdrawal or limitation at a later date is required; or
            ``(B) substitute alternative frequencies pursuant to the 
        provisions of this subsection.
``SEC. 115. DISTRIBUTION OF FREQUENCIES BY THE COMMISSION.
    ``(a) Allocation and Assignment of Immediately Available 
Frequencies.--With respect to the frequencies made available for 
immediate reallocation pursuant to section 113(e)(2), the Commission, 
not later than 18 months after the date of enactment of the Omnibus 
Budget Reconciliation Act of 1993, shall issue regulations to allocate 
such frequencies and shall propose regulations to assign such 
frequencies.
    ``(b) Allocation and Assignment of Remaining Available 
Frequencies.--With respect to the frequencies made available for 
reallocation pursuant to section 113(e)(3), the Commission shall, not 
later than 1 year after receipt of the report required by section 
113(a), prepare, submit to the President and the Congress, and 
implement, a plan for the allocation and assignment under the 1934 Act 
of such frequencies. Such plan shall--
        ``(1) not propose the immediate allocation and assignment of all 
    such frequencies but, taking into account the timetable recommended 
    by the Secretary pursuant to section 113(e), shall propose--
            ``(A) gradually to allocate and assign the frequencies 
        remaining, after making the reservation required by subparagraph 
        (B), over the course of 10 years beginning on the date of 
        submission of such plan; and
            ``(B) to reserve a significant portion of such frequencies 
        for allocation and assignment beginning after the end of such 
        10-year period;
        ``(2) contain appropriate provisions to ensure--
            ``(A) the availability of frequencies for new technologies 
        and services in accordance with the policies of section 7 of the 
        1934 Act (47 U.S.C. 157);
            ``(B) the availability of frequencies to stimulate the 
        development of such technologies; and
            ``(C) the safety of life and property in accordance with the 
        policies of section 1 of the 1934 Act (47 U.S.C. 151);
        ``(3) address (A) the feasibility of reallocating portions of 
    the spectrum from current commercial and other non-Federal uses to 
    provide for more efficient use of the spectrum, and (B) innovation 
    and marketplace developments that may affect the relative 
    efficiencies of different spectrum allocations;
        ``(4) not prevent the Commission from allocating frequencies, 
    and assigning licenses to use frequencies, not included in the plan; 
    and
        ``(5) not preclude the Commission from making changes to the 
    plan in future proceedings.
``SEC. 116. AUTHORITY TO RECOVER REASSIGNED FREQUENCIES.
    ``(a) Authority of President.--Subsequent to the withdrawal of 
assignment to Federal Government stations pursuant to section 114, the 
President may reclaim reassigned frequencies for reassignment to Federal 
Government stations in accordance with this section.
    ``(b) Procedure for Reclaiming Frequencies.--
        ``(1) Unallocated frequencies.--If the frequencies to be 
    reclaimed have not been allocated or assigned by the Commission 
    pursuant to the 1934 Act, the President shall follow the procedures 
    for substitution of frequencies established by section 114(b) of 
    this part.
        ``(2) Allocated frequencies.--If the frequencies to be reclaimed 
    have been allocated or assigned by the Commission, the President 
    shall follow the procedures for substitution of frequencies 
    established by section 114(b) of this part, except that the 
    statement required by section 114(b)(1)(B) shall include--
            ``(A) a timetable to accommodate an orderly transition for 
        licensees to obtain new frequencies and equipment necessary for 
        its utilization; and
            ``(B) an estimate of the cost of displacing spectrum users 
        licensed by the Commission.
    ``(c) Costs of Reclaiming Frequencies.--The Federal Government shall 
bear all costs of reclaiming frequencies pursuant to this section, 
including the cost of equipment which is rendered unusable, the cost of 
relocating operations to a different frequency, and any other costs that 
are directly attributable to the reclaiming of the frequency pursuant to 
this section, and there are authorized to be appropriated such sums as 
may be necessary to carry out the purposes of this section.
    ``(d) Effective Date of Reclaimed Frequencies.--The Commission shall 
not withdraw licenses for any reclaimed frequencies until the end of the 
fiscal year following the fiscal year in which a statement under section 
114(b)(1)(B) pertaining to such frequencies is received by the 
Commission.
    ``(e) Effect on Other Law.--Nothing in this section shall be 
construed to limit or otherwise affect the authority of the President 
under section 706 of the 1934 Act (47 U.S.C. 606).
``SEC. 117. EXISTING ALLOCATION AND TRANSFER AUTHORITY RETAINED.
    ``(a) Additional Reallocation.--Nothing in this part prevents or 
limits additional reallocation of spectrum from the Federal Government 
to other users.
    ``(b) Implementation of New Technologies and Services.--
Notwithstanding any other provision of this part--
        ``(1) the Secretary may, consistent with section 104(e) of this 
    Act, at any time allow frequencies allocated on a primary basis for 
    Federal Government use to be used by non-Federal licensees on a 
    mixed-use basis for the purpose of facilitating the prompt 
    implementation of new technologies or services and for other 
    purposes; and
        ``(2) the Commission shall make any allocation and licensing 
    decisions with respect to such frequencies in a timely manner and in 
    no event later than the date required by section 7 of the 1934 
    Act.''.
    (b) Conforming Amendment To Ensure Collection of FCC Fees.--Section 
104 of the National Telecommunications and Information Administration 
Organization Act (47 U.S.C. 903) is amended by adding at the end the 
following new subsection:
    ``(e) Proof of Compliance With FCC Licensing Requirements.--
        ``(1) Amendment to manual required.--Within 90 days after the 
    date of enactment of this subsection, the Secretary and the NTIA 
    shall amend the spectrum management document described in subsection 
    (a) to require that--
            ``(A) no person or entity (other than an agency or 
        instrumentality of the United States) shall be permitted, after 
        1 year after such date of enactment, to operate a radio station 
        utilizing a frequency that is authorized for the use of 
        government stations pursuant to section 103(b)(2)(A) of this Act 
        for any non-government application unless such person or entity 
        has submitted to the NTIA proof, in a form prescribed by such 
        manual, that such person or entity has obtained a license from 
        the Commission; and
            ``(B) no person or entity (other than an agency or 
        instrumentality of the United States) shall be permitted, after 
        1 year after such date of enactment, to utilize a radio station 
        belonging to the United States for any non-government 
        application unless such person or entity has submitted to the 
        NTIA proof, in a form prescribed by such manual, that such 
        person or entity has obtained a license from the Commission.
        ``(2) Retention of forms.--The NTIA shall maintain on file the 
    proofs submitted under paragraph (1), or facsimiles thereof.
        ``(3) Certification.--Within 1 year after the date of enactment 
    of this subsection, the Secretary and the NTIA shall certify to the 
    Committee on Energy and Commerce of the House of Representatives and 
    the Committee on Commerce, Science, and Transportation of the Senate 
    that--
            ``(A) the amendments required by paragraph (1) have been 
        accomplished; and
            ``(B) the requirements of subparagraphs (A) and (B) of such 
        paragraph are being enforced.''.

SEC. 6002. AUTHORITY TO USE COMPETITIVE BIDDING.

    (a) Use of Competitive Bidding.--Section 309 of the Communications 
Act of 1934 (47 U.S.C. 309) is amended by adding at the end the 
following new subsection:
    ``(j) Use of Competitive Bidding.--
        ``(1) General authority.--If mutually exclusive applications are 
    accepted for filing for any initial license or construction permit 
    which will involve a use of the electromagnetic spectrum described 
    in paragraph (2), then the Commission shall have the authority, 
    subject to paragraph (10), to grant such license or permit to a 
    qualified applicant through the use of a system of competitive 
    bidding that meets the requirements of this subsection.
        ``(2) Uses to which bidding may apply.--A use of the 
    electromagnetic spectrum is described in this paragraph if the 
    Commission determines that--
            ``(A) the principal use of such spectrum will involve, or is 
        reasonably likely to involve, the licensee receiving 
        compensation from subscribers in return for which the licensee--
                ``(i) enables those subscribers to receive 
            communications signals that are transmitted utilizing 
            frequencies on which the licensee is licensed to operate; or
                ``(ii) enables those subscribers to transmit directly 
            communications signals utilizing frequencies on which the 
            licensee is licensed to operate; and
            ``(B) a system of competitive bidding will promote the 
        objectives described in paragraph (3).
        ``(3) Design of systems of competitive bidding.--For each class 
    of licenses or permits that the Commission grants through the use of 
    a competitive bidding system, the Commission shall, by regulation, 
    establish a competitive bidding methodology. The Commission shall 
    seek to design and test multiple alternative methodologies under 
    appropriate circumstances. In identifying classes of licenses and 
    permits to be issued by competitive bidding, in specifying 
    eligibility and other characteristics of such licenses and permits, 
    and in designing the methodologies for use under this subsection, 
    the Commission shall include safeguards to protect the public 
    interest in the use of the spectrum and shall seek to promote the 
    purposes specified in section 1 of this Act and the following 
    objectives:
            ``(A) the development and rapid deployment of new 
        technologies, products, and services for the benefit of the 
        public, including those residing in rural areas, without 
        administrative or judicial delays;
            ``(B) promoting economic opportunity and competition and 
        ensuring that new and innovative technologies are readily 
        accessible to the American people by avoiding excessive 
        concentration of licenses and by disseminating licenses among a 
        wide variety of applicants, including small businesses, rural 
        telephone companies, and businesses owned by members of minority 
        groups and women;
            ``(C) recovery for the public of a portion of the value of 
        the public spectrum resource made available for commercial use 
        and avoidance of unjust enrichment through the methods employed 
        to award uses of that resource; and
            ``(D) efficient and intensive use of the electromagnetic 
        spectrum.
        ``(4) Contents of regulations.--In prescribing regulations 
    pursuant to paragraph (3), the Commission shall--
            ``(A) consider alternative payment schedules and methods of 
        calculation, including lump sums or guaranteed installment 
        payments, with or without royalty payments, or other schedules 
        or methods that promote the objectives described in paragraph 
        (3)(B), and combinations of such schedules and methods;
            ``(B) include performance requirements, such as appropriate 
        deadlines and penalties for performance failures, to ensure 
        prompt delivery of service to rural areas, to prevent 
        stockpiling or warehousing of spectrum by licensees or 
        permittees, and to promote investment in and rapid deployment of 
        new technologies and services;
            ``(C) consistent with the public interest, convenience, and 
        necessity, the purposes of this Act, and the characteristics of 
        the proposed service, prescribe area designations and bandwidth 
        assignments that promote (i) an equitable distribution of 
        licenses and services among geographic areas, (ii) economic 
        opportunity for a wide variety of applicants, including small 
        businesses, rural telephone companies, and businesses owned by 
        members of minority groups and women, and (iii) investment in 
        and rapid deployment of new technologies and services;
            ``(D) ensure that small businesses, rural telephone 
        companies, and businesses owned by members of minority groups 
        and women are given the opportunity to participate in the 
        provision of spectrum-based services, and, for such purposes, 
        consider the use of tax certificates, bidding preferences, and 
        other procedures; and
            ``(E) require such transfer disclosures and antitrafficking 
        restrictions and payment schedules as may be necessary to 
        prevent unjust enrichment as a result of the methods employed to 
        issue licenses and permits.
        ``(5) Bidder and licensee qualification.--No person shall be 
    permitted to participate in a system of competitive bidding pursuant 
    to this subsection unless such bidder submits such information and 
    assurances as the Commission may require to demonstrate that such 
    bidder's application is acceptable for filing. No license shall be 
    granted to an applicant selected pursuant to this subsection unless 
    the Commission determines that the applicant is qualified pursuant 
    to subsection (a) and sections 308(b) and 310. Consistent with the 
    objectives described in paragraph (3), the Commission shall, by 
    regulation, prescribe expedited procedures consistent with the 
    procedures authorized by subsection (i)(2) for the resolution of any 
    substantial and material issues of fact concerning qualifications.
        ``(6) Rules of construction.--Nothing in this subsection, or in 
    the use of competitive bidding, shall--
            ``(A) alter spectrum allocation criteria and procedures 
        established by the other provisions of this Act;
            ``(B) limit or otherwise affect the requirements of 
        subsection (h) of this section, section 301, 304, 307, 310, or 
        706, or any other provision of this Act (other than subsections 
        (d)(2) and (e) of this section);
            ``(C) diminish the authority of the Commission under the 
        other provisions of this Act to regulate or reclaim spectrum 
        licenses;
            ``(D) be construed to convey any rights, including any 
        expectation of renewal of a license, that differ from the rights 
        that apply to other licenses within the same service that were 
        not issued pursuant to this subsection;
            ``(E) be construed to relieve the Commission of the 
        obligation in the public interest to continue to use engineering 
        solutions, negotiation, threshold qualifications, service 
        regulations, and other means in order to avoid mutual 
        exclusivity in application and licensing proceedings;
            ``(F) be construed to prohibit the Commission from issuing 
        nationwide, regional, or local licenses or permits;
            ``(G) be construed to prevent the Commission from awarding 
        licenses to those persons who make significant contributions to 
        the development of a new telecommunications service or 
        technology; or
            ``(H) be construed to relieve any applicant for a license or 
        permit of the obligation to pay charges imposed pursuant to 
        section 8 of this Act.
        ``(7) Consideration of revenues in public interest 
    determinations.--
            ``(A) Consideration prohibited.--In making a decision 
        pursuant to section 303(c) to assign a band of frequencies to a 
        use for which licenses or permits will be issued pursuant to 
        this subsection, and in prescribing regulations pursuant to 
        paragraph (4)(C) of this subsection, the Commission may not base 
        a finding of public interest, convenience, and necessity on the 
        expectation of Federal revenues from the use of a system of 
        competitive bidding under this subsection.
            ``(B) Consideration limited.--In prescribing regulations 
        pursuant to paragraph (4)(A) of this subsection, the Commission 
        may not base a finding of public interest, convenience, and 
        necessity solely or predominantly on the expectation of Federal 
        revenues from the use of a system of competitive bidding under 
        this subsection.
            ``(C) Consideration of demand for spectrum not affected.--
        Nothing in this paragraph shall be construed to prevent the 
        Commission from continuing to consider consumer demand for 
        spectrum-based services.
        ``(8) Treatment of revenues.--
            ``(A) General rule.--Except as provided in subparagraph (B), 
        all proceeds from the use of a competitive bidding system under 
        this subsection shall be deposited in the Treasury in accordance 
        with chapter 33 of title 31, United States Code.
            ``(B) Retention of revenues.--Notwithstanding subparagraph 
        (A), the salaries and expenses account of the Commission shall 
        retain as an offsetting collection such sums as may be necessary 
        from such proceeds for the costs of developing and implementing 
        the program required by this subsection. Such offsetting 
        collections shall be available for obligation subject to the 
        terms and conditions of the receiving appropriations account, 
        and shall be deposited in such accounts on a quarterly basis. 
        Any funds appropriated to the Commission for fiscal years 1994 
        through 1998 for the purpose of assigning licenses using random 
        selection under subsection (i) shall be used by the Commission 
        to implement this subsection.
        ``(9) Use of former government spectrum.--The Commission shall, 
    not later than 5 years after the date of enactment of this 
    subsection, issue licenses and permits pursuant to this subsection 
    for the use of bands of frequencies that--
            ``(A) in the aggregate span not less than 10 megahertz; and
            ``(B) have been reassigned from Government use pursuant to 
        part B of the National Telecommunications and Information 
        Administration Organization Act.
        ``(10) Authority contingent on availability of additional 
    spectrum.--
            ``(A) Initial conditions.--The Commission's authority to 
        issue licenses or permits under this subsection shall not take 
        effect unless--
                ``(i) the Secretary of Commerce has submitted to the 
            Commission the report required by section 113(d)(1) of the 
            National Telecommunications and Information Administration 
            Organization Act;
                ``(ii) such report recommends for immediate reallocation 
            bands of frequencies that, in the aggregate, span not less 
            than 50 megahertz;
                ``(iii) such bands of frequencies meet the criteria 
            required by section 113(a) of such Act; and
                ``(iv) the Commission has completed the rulemaking 
            required by section 332(c)(1)(D) of this Act.
            ``(B) Subsequent conditions.--The Commission's authority to 
        issue licenses or permits under this subsection on and after 2 
        years after the date of the enactment of this subsection shall 
        cease to be effective if--
                ``(i) the Secretary of Commerce has failed to submit the 
            report required by section 113(a) of the National 
            Telecommunications and Information Administration 
            Organization Act;
                ``(ii) the President has failed to withdraw and limit 
            assignments of frequencies as required by paragraphs (1) and 
            (2) of section 114(a) of such Act;
                ``(iii) the Commission has failed to issue the 
            regulations required by section 115(a) of such Act;
                ``(iv) the Commission has failed to complete and submit 
            to Congress, not later than 18 months after the date of 
            enactment of this subsection, a study of current and future 
            spectrum needs of State and local government public safety 
            agencies through the year 2010, and a specific plan to 
            ensure that adequate frequencies are made available to 
            public safety licensees; or
                ``(v) the Commission has failed under section 332(c)(3) 
            to grant or deny within the time required by such section 
            any petition that a State has filed within 90 days after the 
            date of enactment of this subsection;
        until such failure has been corrected.
        ``(11) Termination.--The authority of the Commission to grant a 
    license or permit under this subsection shall expire September 30, 
    1998.
        ``(12) Evaluation.--Not later than September 30, 1997, the 
    Commission shall conduct a public inquiry and submit to the Congress 
    a report--
            ``(A) containing a statement of the revenues obtained, and a 
        projection of the future revenues, from the use of competitive 
        bidding systems under this subsection;
            ``(B) describing the methodologies established by the 
        Commission pursuant to paragraphs (3) and (4);
            ``(C) comparing the relative advantages and disadvantages of 
        such methodologies in terms of attaining the objectives 
        described in such paragraphs;
            ``(D) evaluating whether and to what extent--
                ``(i) competitive bidding significantly improved the 
            efficiency and effectiveness of the process for granting 
            radio spectrum licenses;
                ``(ii) competitive bidding facilitated the introduction 
            of new spectrum-based technologies and the entry of new 
            companies into the telecommunications market;
                ``(iii) competitive bidding methodologies have secured 
            prompt delivery of service to rural areas and have 
            adequately addressed the needs of rural spectrum users; and
                ``(iv) small businesses, rural telephone companies, and 
            businesses owned by members of minority groups and women 
            were able to participate successfully in the competitive 
            bidding process; and
            ``(E) recommending any statutory changes that are needed to 
        improve the competitive bidding process.''.
    (b) Conforming Amendments.--
        (1) Limitations on lotteries.--Section 309 of the Communications 
    Act of 1934 (47 U.S.C. 309) is further amended--
            (A) by striking subsection (i)(1) and inserting the 
        following:
    ``(i) Random Selection.--
        ``(1) General authority.--If--
            ``(A) there is more than one application for any initial 
        license or construction permit which will involve a use of the 
        electromagnetic spectrum; and
            ``(B) the Commission has determined that the use is not 
        described in subsection (j)(2)(A);
    then the Commission shall have the authority to grant such license 
    or permit to a qualified applicant through the use of a system of 
    random selection.''; and
            (B) in paragraph (4), by adding at the end the following new 
        subparagraph:
    ``(C) Not later than 180 days after the date of enactment of this 
subparagraph, the Commission shall prescribe such transfer disclosures 
and antitrafficking restrictions and payment schedules as are necessary 
to prevent the unjust enrichment of recipients of licenses or permits as 
a result of the methods employed to issue licenses under this 
subsection.''.
        (2) Regulatory treatment to enhance auction value of spectrum 
    licenses.--
            (A) Amendment.--Section 332 of the Communications Act of 
        1934 (47 U.S.C. 332) is amended--
                (i) by striking ``private land'' from the heading of the 
            section;
                (ii) by striking ``land'' each place it appears in 
            subsections (a) and (b); and
                (iii) by striking subsection (c) and inserting the 
            following:
    ``(c) Regulatory Treatment of Mobile Services.--
        ``(1) Common carrier treatment of commercial mobile services.--
    (A) A person engaged in the provision of a service that is a 
    commercial mobile service shall, insofar as such person is so 
    engaged, be treated as a common carrier for purposes of this Act, 
    except for such provisions of title II as the Commission may specify 
    by regulation as inapplicable to that service or person. In 
    prescribing or amending any such regulation, the Commission may not 
    specify any provision of section 201, 202, or 208, and may specify 
    any other provision only if the Commission determines that--
            ``(i) enforcement of such provision is not necessary in 
        order to ensure that the charges, practices, classifications, or 
        regulations for or in connection with that service are just and 
        reasonable and are not unjustly or unreasonably discriminatory;
            ``(ii) enforcement of such provision is not necessary for 
        the protection of consumers; and
            ``(iii) specifying such provision is consistent with the 
        public interest.
        ``(B) Upon reasonable request of any person providing commercial 
    mobile service, the Commission shall order a common carrier to 
    establish physical connections with such service pursuant to the 
    provisions of section 201 of this Act. Except to the extent that the 
    Commission is required to respond to such a request, this 
    subparagraph shall not be construed as a limitation or expansion of 
    the Commission's authority to order interconnection pursuant to this 
    Act.
        ``(C) The Commission shall review competitive market conditions 
    with respect to commercial mobile services and shall include in its 
    annual report an analysis of those conditions. Such analysis shall 
    include an identification of the number of competitors in various 
    commercial mobile services, an analysis of whether or not there is 
    effective competition, an analysis of whether any of such 
    competitors have a dominant share of the market for such services, 
    and a statement of whether additional providers or classes of 
    providers in those services would be likely to enhance competition. 
    As a part of making a determination with respect to the public 
    interest under subparagraph (A)(iii), the Commission shall consider 
    whether the proposed regulation (or amendment thereof) will promote 
    competitive market conditions, including the extent to which such 
    regulation (or amendment) will enhance competition among providers 
    of commercial mobile services. If the Commission determines that 
    such regulation (or amendment) will promote competition among 
    providers of commercial mobile services, such determination may be 
    the basis for a Commission finding that such regulation (or 
    amendment) is in the public interest.
        ``(D) The Commission shall, not later than 180 days after the 
    date of enactment of this subparagraph, complete a rulemaking 
    required to implement this paragraph with respect to the licensing 
    of personal communications services, including making any 
    determinations required by subparagraph (C).
        ``(2) Non-common carrier treatment of private mobile services.--
    A person engaged in the provision of a service that is a private 
    mobile service shall not, insofar as such person is so engaged, be 
    treated as a common carrier for any purpose under this Act. A common 
    carrier (other than a person that was treated as a provider of a 
    private land mobile service prior to the enactment of the Omnibus 
    Budget Reconciliation Act of 1993) shall not provide any dispatch 
    service on any frequency allocated for common carrier service, 
    except to the extent such dispatch service is provided on stations 
    licensed in the domestic public land mobile radio service before 
    January 1, 1982. The Commission may by regulation terminate, in 
    whole or in part, the prohibition contained in the preceding 
    sentence if the Commission determines that such termination will 
    serve the public interest.
        ``(3) State preemption.--(A) Notwithstanding sections 2(b) and 
    221(b), no State or local government shall have any authority to 
    regulate the entry of or the rates charged by any commercial mobile 
    service or any private mobile service, except that this paragraph 
    shall not prohibit a State from regulating the other terms and 
    conditions of commercial mobile services. Nothing in this 
    subparagraph shall exempt providers of commercial mobile services 
    (where such services are a substitute for land line telephone 
    exchange service for a substantial portion of the communications 
    within such State) from requirements imposed by a State commission 
    on all providers of telecommunications services necessary to ensure 
    the universal availability of telecommunications service at 
    affordable rates. Notwithstanding the first sentence of this 
    subparagraph, a State may petition the Commission for authority to 
    regulate the rates for any commercial mobile service and the 
    Commission shall grant such petition if such State demonstrates 
    that--
            ``(i) market conditions with respect to such services fail 
        to protect subscribers adequately from unjust and unreasonable 
        rates or rates that are unjustly or unreasonably discriminatory; 
        or
            ``(ii) such market conditions exist and such service is a 
        replacement for land line telephone exchange service for a 
        substantial portion of the telephone land line exchange service 
        within such State.
    The Commission shall provide reasonable opportunity for public 
    comment in response to such petition, and shall, within 9 months 
    after the date of its submission, grant or deny such petition. If 
    the Commission grants such petition, the Commission shall authorize 
    the State to exercise under State law such authority over rates, for 
    such periods of time, as the Commission deems necessary to ensure 
    that such rates are just and reasonable and not unjustly or 
    unreasonably discriminatory.
        ``(B) If a State has in effect on June 1, 1993, any regulation 
    concerning the rates for any commercial mobile service offered in 
    such State on such date, such State may, no later than 1 year after 
    the date of enactment of the Omnibus Budget Reconciliation Act of 
    1993, petition the Commission requesting that the State be 
    authorized to continue exercising authority over such rates. If a 
    State files such a petition, the State's existing regulation shall, 
    notwithstanding subparagraph (A), remain in effect until the 
    Commission completes all action (including any reconsideration) on 
    such petition. The Commission shall review such petition in 
    accordance with the procedures established in such subparagraph, 
    shall complete all action (including any reconsideration) within 12 
    months after such petition is filed, and shall grant such petition 
    if the State satisfies the showing required under subparagraph 
    (A)(i) or (A)(ii). If the Commission grants such petition, the 
    Commission shall authorize the State to exercise under State law 
    such authority over rates, for such period of time, as the 
    Commission deems necessary to ensure that such rates are just and 
    reasonable and not unjustly or unreasonably discriminatory. After a 
    reasonable period of time, as determined by the Commission, has 
    elapsed from the issuance of an order under subparagraph (A) or this 
    subparagraph, any interested party may petition the Commission for 
    an order that the exercise of authority by a State pursuant to such 
    subparagraph is no longer necessary to ensure that the rates for 
    commercial mobile services are just and reasonable and not unjustly 
    or unreasonably discriminatory. The Commission shall provide 
    reasonable opportunity for public comment in response to such 
    petition, and shall, within 9 months after the date of its 
    submission, grant or deny such petition in whole or in part.
        ``(4) Regulatory treatment of communications satellite 
    corporation.--Nothing in this subsection shall be construed to alter 
    or affect the regulatory treatment required by title IV of the 
    Communications Satellite Act of 1962 of the corporation authorized 
    by title III of such Act.
        ``(5) Space segment capacity.--Nothing in this section shall 
    prohibit the Commission from continuing to determine whether the 
    provision of space segment capacity by satellite systems to 
    providers of commercial mobile services shall be treated as common 
    carriage.
        ``(6) Foreign ownership.--The Commission, upon a petition for 
    waiver filed within 6 months after the date of enactment of the 
    Omnibus Budget Reconciliation Act of 1993, may waive the application 
    of section 310(b) to any foreign ownership that lawfully existed 
    before May 24, 1993, of any provider of a private land mobile 
    service that will be treated as a common carrier as a result of the 
    enactment of the Omnibus Budget Reconciliation Act of 1993, but only 
    upon the following conditions:
            ``(A) The extent of foreign ownership interest shall not be 
        increased above the extent which existed on May 24, 1993.
            ``(B) Such waiver shall not permit the subsequent transfer 
        of ownership to any other person in violation of section 310(b).
    ``(d) Definitions.--For purposes of this section--
        ``(1) the term `commercial mobile service' means any mobile 
    service (as defined in section 3(n)) that is provided for profit and 
    makes interconnected service available (A) to the public or (B) to 
    such classes of eligible users as to be effectively available to a 
    substantial portion of the public, as specified by regulation by the 
    Commission;
        ``(2) the term `interconnected service' means service that is 
    interconnected with the public switched network (as such terms are 
    defined by regulation by the Commission) or service for which a 
    request for interconnection is pending pursuant to subsection 
    (c)(1)(B); and
        ``(3) the term `private mobile service' means any mobile service 
    (as defined in section 3(n)) that is not a commercial mobile service 
    or the functional equivalent of a commercial mobile service, as 
    specified by regulation by the Commission.''.
            (B) Additional conforming amendments.--(i) Section 2(b) of 
        the Communications Act of 1934 (47 U.S.C. 152(b)) is amended by 
        inserting ``and section 332,'' after ``inclusive,''.
            (ii) Section 3 of the Communications Act of 1934 (47 U.S.C. 
        153) is amended--
                (I) in subsection (n) by inserting ``(1)'' after ``and 
            includes'', and by inserting before the period at the end 
            the following: ``, (2) a mobile service which provides a 
            regularly interacting group of base, mobile, portable, and 
            associated control and relay stations (whether licensed on 
            an individual, cooperative, or multiple basis) for private 
            one-way or two-way land mobile radio communications by 
            eligible users over designated areas of operation, and (3) 
            any service for which a license is required in a personal 
            communications service established pursuant to the 
            proceeding entitled `Amendment to the Commission's Rules to 
            Establish New Personal Communications Services' (GEN Docket 
            No. 90-314; ET Docket No. 92-100), or any successor 
            proceeding''; and
                (II) by striking subsection (gg).
    (c) Effective Dates.--
        (1) In general.--Except as provided in paragraph (2), the 
    amendments made by this section are effective on the date of 
    enactment of this Act.
        (2) Effective dates of mobile service amendments.--The 
    amendments made by subsection (b)(2) shall be effective on the date 
    of enactment of this Act, except that--
            (A) section 332(c)(3)(A) of the Communications Act of 1934, 
        as amended by such subsection, shall take effect 1 year after 
        such date of enactment; and
            (B) any private land mobile service provided by any person 
        before such date of enactment, and any paging service utilizing 
        frequencies allocated as of January 1, 1993, for private land 
        mobile services, shall, except for purposes of section 332(c)(6) 
        of such Act, be treated as a private mobile service until 3 
        years after such date of enactment.
    (d) Deadlines for Commission Action.--
        (1) General rulemaking.--The Federal Communications Commission 
    shall prescribe regulations to implement section 309(j) of the 
    Communications Act of 1934 (as added by this section) within 210 
    days after the date of enactment of this Act.
        (2) PCS orders and licensing.--The Commission shall--
            (A) within 180 days after such date of enactment, issue a 
        final report and order (i) in the matter entitled 
        ``Redevelopment of Spectrum to Encourage Innovation in the Use 
        of New Telecommunications Technologies'' (ET Docket No. 92-9); 
        and (ii) in the matter entitled ``Amendment of the Commission's 
        Rules to Establish New Personal Communications Services'' (GEN 
        Docket No. 90-314; ET Docket No. 92-100); and
            (B) within 270 days after such date of enactment, commence 
        issuing licenses and permits in the personal communications 
        service.
        (3) Transitional rulemaking for mobile service providers.--
    Within 1 year after the date of enactment of this Act, the Federal 
    Communications Commission--
            (A) shall issue such modifications or terminations of the 
        regulations applicable (before the date of enactment of this 
        Act) to private land mobile services as are necessary to 
        implement the amendments made by subsection (b)(2);
            (B) in the regulations that will, after such date of 
        enactment, apply to a service that was a private land mobile 
        service and that becomes a commercial mobile service (as a 
        consequence of such amendments), shall make such other 
        modifications or terminations as may be necessary and practical 
        to assure that licensees in such service are subjected to 
        technical requirements that are comparable to the technical 
        requirements that apply to licensees that are providers of 
        substantially similar common carrier services;
            (C) shall issue such other regulations as are necessary to 
        implement the amendments made by subsection (b)(2); and
            (D) shall include, in such regulations, modifications, and 
        terminations, such provisions as are necessary to provide for an 
        orderly transition.
    (e) Special Rule.--The Federal Communications Commission shall not 
issue any license or permit pursuant to section 309(i) of the 
Communications Act of 1934 (47 U.S.C. 309(i)) after the date of 
enactment of this Act unless--
        (1) the Commission has made the determination required by 
    paragraph (1)(B) of such section (as added by this section); or
        (2) one or more applications for such license were accepted for 
    filing by the Commission before July 26, 1993.

SEC. 6003. ADDITIONAL COMMUNICATIONS FEES.

    (a) Regulatory Fees.--
        (1) Amendment.--Title I of the Communications Act of 1934 is 
    amended by inserting after section 8 the following new section:

``SEC. 9. REGULATORY FEES.

    ``(a) General Authority.--The Commission, in accordance with this 
section, shall assess and collect regulatory fees to recover the costs 
of the following regulatory activities of the Commission: enforcement 
activities, policy and rulemaking activities, user information services, 
and international activities.
    ``(b) Establishment and Adjustment of Regulatory Fees.--
        ``(1) In general.--The fees assessed under subsection (a) 
    shall--
            ``(A) be derived by determining the full-time equivalent 
        number of employees performing the activities described in 
        subsection (a) within the Private Radio Bureau, Mass Media 
        Bureau, Common Carrier Bureau, and other offices of the 
        Commission, adjusted to take into account factors that are 
        reasonably related to the benefits provided to the payor of the 
        fee by the Commission's activities, including such factors as 
        service area coverage, shared use versus exclusive use, and 
        other factors that the Commission determines are necessary in 
        the public interest;
            ``(B) be established at amounts that will result in 
        collection, during each fiscal year, of an amount that can 
        reasonably be expected to equal the amount appropriated for such 
        fiscal year for the performance of the activities described in 
        subsection (a); and
            ``(C) until adjusted or amended by the Commission pursuant 
        to paragraph (2) or (3), be the fees established by the Schedule 
        of Regulatory Fees in subsection (g).
        ``(2) Mandatory adjustment of schedule.--For any fiscal year 
    after fiscal year 1994, the Commission shall, by rule, revise the 
    Schedule of Regulatory Fees by proportionate increases or decreases 
    to reflect, in accordance with paragraph (1)(B), changes in the 
    amount appropriated for the performance of the activities described 
    in subsection (a) for such fiscal year. Such proportionate increases 
    or decreases shall--
            ``(A) be adjusted to reflect, within the overall amounts 
        described in appropriations Acts under the authority of 
        paragraph (1)(A), unexpected increases or decreases in the 
        number of licensees or units subject to payment of such fees; 
        and
            ``(B) be established at amounts that will result in 
        collection of an aggregate amount of fees pursuant to this 
        section that can reasonably be expected to equal the aggregate 
        amount of fees that are required to be collected by 
        appropriations Acts pursuant to paragraph (1)(B).
    Increases or decreases in fees made by adjustments pursuant to this 
    paragraph shall not be subject to judicial review. In making 
    adjustments pursuant to this paragraph the Commission may round such 
    fees to the nearest $5 in the case of fees under $1,000, or to the 
    nearest $25 in the case of fees of $1,000 or more.
        ``(3) Permitted amendments.--In addition to the adjustments 
    required by paragraph (2), the Commission shall, by regulation, 
    amend the Schedule of Regulatory Fees if the Commission determines 
    that the Schedule requires amendment to comply with the requirements 
    of paragraph (1)(A). In making such amendments, the Commission shall 
    add, delete, or reclassify services in the Schedule to reflect 
    additions, deletions, or changes in the nature of its services as a 
    consequence of Commission rulemaking proceedings or changes in law. 
    Increases or decreases in fees made by amendments pursuant to this 
    paragraph shall not be subject to judicial review.
        ``(4) Notice to congress.--The Commission shall--
            ``(A) transmit to the Congress notification of any 
        adjustment made pursuant to paragraph (2) immediately upon the 
        adoption of such adjustment; and
            ``(B) transmit to the Congress notification of any amendment 
        made pursuant to paragraph (3) not later than 90 days before the 
        effective date of such amendment.
    ``(c) Enforcement.--
        ``(1) Penalties for late payment.--The Commission shall 
    prescribe by regulation an additional charge which shall be assessed 
    as a penalty for late payment of fees required by subsection (a) of 
    this section. Such penalty shall be 25 percent of the amount of the 
    fee which was not paid in a timely manner.
        ``(2) Dismissal of applications for filings.--The Commission may 
    dismiss any application or other filing for failure to pay in a 
    timely manner any fee or penalty under this section.
        ``(3) Revocations.--In addition to or in lieu of the penalties 
    and dismissals authorized by paragraphs (1) and (2), the Commission 
    may revoke any instrument of authorization held by any entity that 
    has failed to make payment of a regulatory fee assessed pursuant to 
    this section. Such revocation action may be taken by the Commission 
    after notice of the Commission's intent to take such action is sent 
    to the licensee by registered mail, return receipt requested, at the 
    licensee's last known address. The notice will provide the licensee 
    at least 30 days to either pay the fee or show cause why the fee 
    does not apply to the licensee or should otherwise be waived or 
    payment deferred. A hearing is not required under this subsection 
    unless the licensee's response presents a substantial and material 
    question of fact. In any case where a hearing is conducted pursuant 
    to this section, the hearing shall be based on written evidence 
    only, and the burden of proceeding with the introduction of evidence 
    and the burden of proof shall be on the licensee. Unless the 
    licensee substantially prevails in the hearing, the Commission may 
    assess the licensee for the costs of such hearing. Any Commission 
    order adopted pursuant to this subsection shall determine the amount 
    due, if any, and provide the licensee with at least 30 days to pay 
    that amount or have its authorization revoked. No order of 
    revocation under this subsection shall become final until the 
    licensee has exhausted its right to judicial review of such order 
    under section 402(b)(5) of this title.
    ``(d) Waiver, Reduction, and Deferment.--The Commission may waive, 
reduce, or defer payment of a fee in any specific instance for good 
cause shown, where such action would promote the public interest.
    ``(e) Deposit of Collections.--Moneys received from fees established 
under this section shall be deposited as an offsetting collection in, 
and credited to, the account providing appropriations to carry out the 
functions of the Commission.
    ``(f) Regulations.--
        ``(1) In general.--The Commission shall prescribe appropriate 
    rules and regulations to carry out the provisions of this section. 
    Such rules and regulations shall permit payment by installments in 
    the case of fees in large amounts, and in the case of fees in small 
    amounts, shall require the payment of the fee in advance for a 
    number of years not to exceed the term of the license held by the 
    payor.
    ``(g) Schedule.--Until amended by the Commission pursuant to 
subsection (b), the Schedule of Regulatory Fees which the Federal 
Communications Commission shall, subject to subsection (a)(2), assess 
and collect shall be as follows:

    

                         ``Schedule of Regulatory Fees                        
------------------------------------------------------------------------------
                                                                     Annual   
                            Bureau/Category                        Regulatory 
                                                                       Fee    
------------------------------------------------------------------------------
      Private Radio Bureau                                                    
        Exclusive use services (per license)                                  
         Land Mobile (above 470 MHz, Base Station and SMRS) (47               
          C.F.R. Part 90).......................................           $16
         Microwave (47 C.F.R. Part 94)..........................            16
         Interactive Video Data Service (47 C.F.R. Part ).......            16
        Shared use services (per license unless otherwise noted)             7
        Amateur vanity call-signs...............................             7
      Mass Media Bureau (per license)                                         
        AM radio (47 C.F.R. Part 73)                                          
         Class D Daytime........................................           250
         Class A Fulltime.......................................           900
         Class B Fulltime.......................................           500
         Class C Fulltime.......................................           200
         Construction permits...................................           100
        FM radio (47 C.F.R. Part 73)                                          
         Classes C, C1, C2, B...................................           900
         Classes A, B1, C3......................................           600
         Construction permits...................................           500
        TV (47 C.F.R. Part 73)                                                
         VHF Commercial                                                       
          Markets 1 thru 10.....................................        18,000
          Markets 11 thru 25....................................        16,000
          Markets 26 thru 50....................................        12,000
          Markets 51 thru 100...................................         8,000
          Remaining Markets.....................................         5,000
          Construction permits..................................         4,000
         UHF Commercial                                                       
          Markets 1 thru 10.....................................        14,400
          Markets 11 thru 25....................................        12,800
          Markets 26 thru 50....................................         9,600
          Markets 51 thru 100...................................         6,400
          Remaining Markets.....................................         4,000
          Construction permits..................................         3,200
        Low Power TV, TV Translator, and TV Booster (47 C.F.R.                
         Part 74)...............................................           135
        Broadcast Auxiliary (47 C.F.R. Part 74).................            25
        International (HF) Broadcast (47 C.F.R. Part 73)........           200
        Cable Antenna Relay Service (47 C.F.R. Part 78).........           220
        Cable Television System (per 1,000 subscribers) (47                   
         C.F.R. Part 76)........................................           370
      Common Carrier Bureau                                                   
        Radio Facilities                                                      
         Cellular Radio (per 1,000 subscribers) (47 C.F.R. Part               
          22)...................................................            60
         Personal Communications (per 1,000 subscribers) (47                  
          C.F.R.)...............................................            60
         Space Station (per operational station in                            
          geosynchronous orbit) (47 C.F.R. Part 25).............        65,000
         Space Station (per system in low-earth orbit) (47                    
          C.F.R. Part 25).......................................        90,000
         Public Mobile (per 1,000 subscribers) (47 C.F.R. Part                
          22)...................................................            60
         Domestic Public Fixed (per call sign) (47 C.F.R. Part                
          21)...................................................            55
         International Public Fixed (per call sign) (47 C.F.R.                
          Part 23)..............................................           110
        Earth Stations (47 C.F.R. Part 25)                                    
         VSAT and equivalent C-Band antennas (per 100 antennas).             6
         Mobile satellite earth stations (per 100 antennas).....             6
         Earth station antennas                                               
          Less than 9 meters (per 100 antennas).................             6
          9 Meters or more                                                    
           Transmit/Receive and Transmit Only (per meter).......            85
           Receive only (per meter).............................            55
      Carriers                                                                
        Inter-Exchange Carrier (per 1,000 presubscribed access                
         lines).................................................            60
        Local Exchange Carrier (per 1,000 access lines).........            60
        Competitive access provider (per 1,000 subscribers).....            60
        International circuits (per 100 active 64KB circuit or                
         equivalent)............................................           220
------------------------------------------------------------------------------


    ``(h) Exceptions.--The charges established under this section shall 
not be applicable to (1) governmental entities or nonprofit entities; or 
(2) to amateur radio operator licenses under part 97 of the Commission's 
regulations (47 C.F.R. Part 97).
    ``(i) Accounting System.--The Commission shall develop accounting 
systems necessary to making the adjustments authorized by subsection 
(b)(3). In the Commission's annual report, the Commission shall prepare 
an analysis of its progress in developing such systems and shall afford 
interested persons the opportunity to submit comments concerning the 
allocation of the costs of performing the functions described in 
subsection (a) among the services in the Schedule.''.
        (2) Conforming amendments.--Section 8 of the Communications Act 
    of 1934 (47 U.S.C. 158) is amended--
            (A) by striking the heading of such section and inserting 
        ``application fees'';
            (B) by striking ``charges'' each place it appears and 
        inserting ``application fees'';
            (C) by striking ``charge'' each place it appears in 
        subsection (c) and inserting ``application fee'';
            (D) by striking out ``Schedule of Charges'' each place it 
        appears and inserting ``Schedule of Application Fees''; and
            (E) in the schedule contained in subsection (g)--
                (i) by striking ``Schedule of Charges'' and inserting 
            ``Schedule of Application Fees'';
                (ii) by striking ``charge'' and ``Charges'' each place 
            they appear and inserting ``application fee'' and 
            ``Application fees'', respectively; and
                (iii) by striking ``Charges'' and inserting 
            ``Application fees''.
    (b) Use of Regulatory Fees.--Section 6 of the Communications Act of 
1934 (47 U.S.C. 156) is amended by adding at the end the following new 
subsection:
    ``(d) Of the sum appropriated in any fiscal year under this section, 
a portion, in an amount determined under section 9(b), shall be derived 
from fees authorized by section 9.''.
           TITLE VII--NUCLEAR REGULATORY COMMISSION PROVISIONS

SEC. 7001. NUCLEAR REGULATORY COMMISSION ANNUAL CHARGES.

    Section 6101(a)(3) of the Omnibus Budget Reconciliation Act of 1990 
(42 U.S.C. 2214(a)(3)) is amended by striking ``September 30, 1995'' and 
inserting ``September 30, 1998''.
                  TITLE VIII--PATENT AND TRADEMARK FEES

SEC. 8001. PATENT AND TRADEMARK FEES.

    Section 10101 of the Omnibus Budget Reconciliation Act of 1990 (35 
U.S.C. 41 note) is amended--
        (1) in subsection (a) by striking ``1995'' and inserting 
    ``1998'';
        (2) in subsection (b)(2) by striking ``1995'' and inserting 
    ``1998''; and
        (3) in subsection (c)--
            (A) by striking ``through 1995'' and inserting ``through 
        1998''; and
            (B) by adding at the end the following:
        ``(6) $111,000,000 in fiscal year 1996.
        ``(7) $115,000,000 in fiscal year 1997.
        ``(8) $119,000,000 in fiscal year 1998.''.
                  TITLE IX--MERCHANT MARINE PROVISIONS

SEC. 9001. EXTENSION OF VESSEL TONNAGE DUTIES.

    (a) Extension of Duties.--Section 36 of the Act of August 5, 1909 
(36 Stat. 111; 46 App. U.S.C. 121), is amended by--
        (1) striking ``and 1995,'' each place it appears and inserting 
    ``1995, 1996, 1997, 1998,'';
        (2) striking ``place,'' and inserting ``place;''; and
        (3) striking ``port, not, however, to include vessels in 
    distress or not engaged in trade'' and inserting ``port. However, 
    neither duty shall be imposed on vessels in distress or not engaged 
    in trade''.
    (b) Conforming Amendment.--The Act of March 8, 1910 (36 Stat. 234; 
46 App. U.S.C. 132), is amended by striking ``and 1995,'' and inserting 
``1995, 1996, 1997, and 1998,''.
    (c) Technical Correction.--
        (1) Correction.--Section 10402(a) of the Omnibus Budget 
    Reconciliation Act of 1990 (104 Stat. 1388-398) is amended by 
    striking ``in the second paragraph''.
        (2) Effective date.--The amendment made by paragraph (1) shall 
    be effective on and after November 5, 1990.
                  TITLE X--NATURAL RESOURCE PROVISIONS
                     Subtitle A--Recreation Use Fees

SEC. 10001. ADMISSION FEES.

    (a) Additional Areas.--(1) The first sentence of section 4(a) of the 
Land and Water Conservation Fund Act of 1965 (16 U.S.C. 4601-6a(a)) is 
amended by inserting after ``National Park System'' the phrase ``or 
National Conservation Areas'' and by inserting after ``National 
Recreation Areas'' the following ``, National Monuments, National 
Volcanic Monuments, National Scenic Areas, and no more than 21 areas of 
concentrated public use''.
    (2) Section 4(a) of the Land and Water Conservation Fund Act of 1965 
(16 U.S.C. 4601-6a(a)) is amended by inserting the following after the 
first sentence: ``For purposes of this subsection, the term `area of 
concentrated public use' means an area that is managed primarily for 
outdoor recreation purposes, contains at least one major recreation 
attraction, where facilities and services necessary to accommodate heavy 
public use are provided, and public access to the area is provided in 
such a manner that admission fees can be efficiently collected at one or 
more centralized locations.''.
    (b) Golden Age Passport.--The second sentence of section 4(a)(4) of 
the Land and Water Conservation Fund Act of 1965 (16 U.S.C. 4601-
6a(a)(4)) is amended by striking ``without charge,'' and inserting in 
lieu thereof ``for a one-time charge of $10,''.

SEC. 10002. RECREATION USER FEES.

    (a) In General.--(1) The first sentence of section 4(b) of the Land 
and Water Conservation Fund Act of 1965 (16 U.S.C. 4601-6a(b)) is 
amended by striking out ``toilet facilities, picnic tables, or boat 
ramps'' and all that follows down through the end of the sentence and 
inserting in lieu thereof: ``or toilet facilities, nor shall there be 
any such charge solely for the use of picnic tables: Provided, That in 
no event shall there be a charge for the use of any campground not 
having a majority of the following: tent or trailer spaces, picnic 
tables, drinking water, access road, refuse containers, toilet 
facilities, personal collection of the fee by an employee or agent of 
the Federal agency operating the facility, reasonable visitor 
protection, and simple devices for containing a campfire (where 
campfires are permitted). For the purposes of this subsection, the term 
`specialized outdoor recreation sites' includes, but is not limited to, 
campgrounds, swimming sites, boat launch facilities, and managed parking 
lots.''.
    (2) Section 4(b) of the Land and Water Conservation Fund Act of 1965 
(16 U.S.C. 4601-6a(b)) is amended by striking the second sentence.
    (b) Costs of Collection.--Section 4(i)(1) of the Land and Water 
Conservation Fund Act of 1965 (16 U.S.C. 4601-6a(i)) is amended by 
inserting ``(A)'' after ``(1)'' and by adding the following at the end 
of paragraph (1):
    ``(B) Notwithstanding subparagraph (A), in any fiscal year, the 
Secretary of Agriculture and the Secretary of the Interior may withhold 
from the special account established under subparagraph (A) such portion 
of all receipts collected from fees imposed under this section in such 
fiscal year as the Secretary of Agriculture or the Secretary of the 
Interior, as appropriate, determines to be equal to the fee collection 
costs for that fiscal year: Provided, That such costs shall not exceed 
15 percent of all receipts collected from fees imposed under this 
section in that fiscal year. The amounts so withheld shall be retained 
by the Secretary of Agriculture or the Secretary of the Interior, as 
appropriate, and shall be available, without further appropriation, for 
expenditure by the Secretary concerned to cover fee collection costs in 
that fiscal year. The Secretary concerned shall deposit into the special 
account established pursuant to subparagraph (A) any amounts so retained 
which remain unexpended and unobligated at the end of the fiscal year. 
For the purposes of this subparagraph, for any fiscal year, the term 
`fee collection costs' means those costs for personnel and 
infrastructure directly associated with the collection of fees imposed 
under this section.''.
    (c) Commercial Tour Use Fees.--Section 4 of the Land and Water 
Conservation Fund Act of 1965 (16 U.S.C. 4601-6a) is amended by adding 
the following new subsection at the end thereof:
    ``(n)(1) In the case of each unit of the National Park System for 
which an admission fee is charged under this section, the Secretary of 
the Interior shall establish, by October 1, 1993, a commercial tour use 
fee to be imposed on each vehicle entering the unit for the purpose of 
providing commercial tour services within the unit. Fee revenue derived 
from such commercial tour use fees shall be deposited into the special 
account established under subsection (i).
    ``(2) The Secretary shall establish the amount of fee per entry as 
follows:
        ``(A) $25 per vehicle with a passenger capacity of 25 persons or 
    less, and
        ``(B) $50 per vehicle with a passenger capacity of more than 25 
    persons.
    ``(3) The Secretary may periodically make reasonable adjustments to 
the commercial tour use fee imposed under this subsection.
    ``(4) The commercial tour use fee imposed under this subsection 
shall not apply to either of the following:
        ``(A) Any vehicle transporting organized school groups or 
    outings conducted for educational purposes by schools or other bona 
    fide educational institutions.
        ``(B) Any vehicle entering a park system unit pursuant to a 
    contract issued under the Act of October 9, 1965 (16 U.S.C. 20-20g) 
    entitled `An Act relating to the establishment of concession 
    policies in the areas administered by the National Park Service and 
    for other purposes.'.
    ``(5)(A) The provisions of this subsection shall apply to aircraft 
entering the airspace of units of the National Park System identified in 
section 2(b) and section 3 of Public Law 100-91 for the specific purpose 
of providing commercial tour services within the airspace of such units.
    ``(B) The provisions of this subsection shall also apply to aircraft 
entering the airspace of other units of the National Park System for the 
specific purpose of providing commercial tour services if the Secretary 
determines that the level of such services is equal to or greater than 
the level at those units of the National Park System specified in 
subparagraph (A).''.
    (d) Non-Federal Golden Eagle Passport Sales.--Section 4(a)(1)(A) of 
the Land and Water Conservation Fund Act of 1965 (16 U.S.C. 4601-
6a(a)(1)(A)) is amended by inserting ``(i)'' after ``(A)'' and by adding 
at the end thereof the following new clause:
    ``(ii) The Secretary of the Interior and the Secretary of 
Agriculture may authorize businesses, nonprofit entities, and other 
organizations to sell and collect fees for the Golden Eagle Passport 
subject to such terms and conditions as the Secretaries may jointly 
prescribe. The Secretaries shall develop detailed guidelines for 
promotional advertising of non-Federal Golden Eagle Passport sales and 
shall monitor compliance with such guidelines. The Secretaries may 
authorize the sellers to withhold amounts up to, but not exceeding 8 
percent of the gross fees collected from the sale of such passports as 
reimbursement for actual expenses of the sales. Receipts from such non-
Federal sales of the Golden Eagle Passport shall be deposited into the 
special account established in subsection (i), to be allocated between 
the Secretary of the Interior and the Secretary of Agriculture in the 
same ratio as receipts from admission into Federal fee areas 
administered by the Secretary of Agriculture and the Secretary of the 
Interior pursuant to subsection (a).''.
    (e) Conforming Amendment.--Section 4(a)(1)(A) of the Land and Water 
Conservation Fund Act of 1965 (16 U.S.C. 4601-6a(a)(1)(A)) is amended by 
striking the third sentence in its entirety and inserting in lieu 
thereof ``The annual permit shall be valid for a period of 12 months 
from the date the annual fee is paid.''.

SEC. 10003. COMMUNICATION SITE FEES.

    Notwithstanding any other provision of law, for fiscal year 1994, 
the Secretary of Agriculture and the Secretary of the Interior shall 
assess and collect annual charges for the utilization of existing radio, 
television, and commercial telephone transmission communication sites 
located on Federal lands administered by the Forest Service and the 
Bureau of Land Management at a level 10 percent above the fee assessed 
and collected during fiscal year 1993. For a site located after the 
enactment of this Act, the charges for fiscal year 1994 shall be equal 
in amount to the charges assessed for a comparable new site located 
before the enactment of this Act, plus 10 percent.
            Subtitle B--Hardrock Mining Claim Maintenance Fee

SEC. 10101. FEE.

    (a) Claim Maintenance Fee.--The holder of each unpatented mining 
claim, mill or tunnel site located pursuant to the Mining Laws of the 
United States, whether located before or after the enactment of this 
Act, shall pay to the Secretary of the Interior, on or before August 31 
of each year, for years 1994 through 1998, a claim maintenance fee of 
$100 per claim. Such claim maintenance fee shall be in lieu of the 
assessment work requirement contained in the Mining Law of 1872 (30 
U.S.C. 28-28e) and the related filing requirements contained in section 
314 (a) and (c) of the Federal Land Policy and Management Act of 1976 
(43 U.S.C. 1744 (a) and (c)).
    (b) Time of Payment.--The claim maintenance fee payable pursuant to 
subsection (a) for any assessment year shall be paid before the 
commencement of the assessment year, except that for the initial 
assessment year in which the location is made, the locator shall pay the 
claim maintenance fee at the time the location notice is recorded with 
the Bureau of Land Management. The location fee imposed under section 
10102 shall be payable not later than 90 days after the date of 
location.
    (c) Oil Shale Claims Subject to Claim Maintenance Fees Under Energy 
Policy Act of 1992.--This section shall not apply to any oil shale 
claims for which a fee is required to be paid under section 2511(e)(2) 
of the Energy Policy Act of 1992 (Public Law 102-486; 106 Stat. 3111; 30 
U.S.C. 242).
    (d) Waiver.--(1) The claim maintenance fee required under this 
section may be waived for a claimant who certifies in writing to the 
Secretary that on the date the payment was due, the claimant and all 
related parties--
        (A) held not more than 10 mining claims, mill sites, or tunnel 
    sites, or any combination thereof, on public lands; and
        (B) have performed assessment work required under the Mining Law 
    of 1872 (30 U.S.C. 28-28e) to maintain the mining claims held by the 
    claimant and such related parties for the assessment year ending on 
    noon of September 1 of the calendar year in which payment of the 
    claim maintenance fee was due.
    (2) For purposes of paragraph (1), with respect to any claimant, the 
term ``related party'' means--
        (A) the spouse and dependent children (as defined in section 152 
    of the Internal Revenue Code of 1986), of the claimant; and
        (B) a person who controls, is controlled by, or is under common 
    control with the claimant.
For purposes of this section, the term control includes actual control, 
legal control, and the power to exercise control, through or by common 
directors, officers, stockholders, a voting trust, or a holding company 
or investment company, or any other means.

SEC. 10102. LOCATION FEE.

    Notwithstanding any other provision of law, for every unpatented 
mining claim, mill or tunnel site located after the date of enactment of 
this subtitle and before September 30, 1998, pursuant to the Mining Laws 
of the United States, the locator shall, at the time the location notice 
is recorded with the Bureau of Land Management, pay to the Secretary of 
the Interior a location fee, in addition to the claim maintenance fee 
required by section 10101, of $25.00 per claim.

SEC. 10103. CO-OWNERSHIP.

    The co-ownership provisions of the Mining Law of 1872 (30 U.S.C. 28) 
shall remain in effect, except that in applying such provisions, the 
annual claim maintenance fee required under this Act shall, where 
applicable, replace applicable assessment requirements and expenditures.

SEC. 10104. FAILURE TO PAY.

    Failure to pay the claim maintenance fee or the location fee as 
required by this subtitle shall conclusively constitute a forfeiture of 
the unpatented mining claim, mill or tunnel site by the claimant and the 
claim shall be deemed null and void by operation of law.

SEC. 10105. OTHER REQUIREMENTS.

    (a) Federal Land Policy and Management Act Requirements.--Nothing in 
this subtitle shall change or modify the requirements of section 314(b) 
of the Federal Land Policy and Management Act of 1976 (43 U.S.C. 
1744(b)), or the requirements of section 314(c) of the Federal Land 
Policy and Management Act of 1976 (43 U.S.C. 1744(c)) related to filings 
required by section 314(b), and such requirements shall remain in effect 
with respect to claims, and mill or tunnel sites for which fees are 
required to be paid under this section.
    (b) Revised Statutes Section 2324.--The third sentence of section 
2324 of the Revised Statutes (30 U.S.C. 28) is amended by inserting 
after ``On each claim located after the tenth day of May, eighteen 
hundred and seventy-two,'' the following: ``that is granted a waiver 
under section 10101 of the Omnibus Budget Reconciliation Act of 1993,''.
    (c) Fee Adjustments.--(1) The Secretary of the Interior shall adjust 
the fees required by this subtitle to reflect changes in the Consumer 
Price Index published by the Bureau of Labor Statistics of the 
Department of Labor every 5 years after the date of the enactment of 
this Act, or more frequently if the Secretary determines an adjustment 
to be reasonable.
    (2) The Secretary shall provide claimants notice of any adjustment 
made under this subsection not later than July 1 of any year in which 
the adjustment is made.
    (3) A fee adjustment under this subsection shall begin to apply the 
first assessment year which begins after adjustment is made.

SEC. 10106. REGULATIONS.

    The Secretary of the Interior shall promulgate rules and regulations 
to carry out the terms and conditions of this subtitle as soon as 
practicable after the date of the enactment of this subtitle.
                      Subtitle C--Mineral Receipts

SEC. 10201. AMENDMENT TO THE MINERAL LEASING ACT.

    Section 35 of the Mineral Leasing Act (30 U.S.C. 191) is amended as 
follows:
        (1) Delete the last sentence and redesignate the remaining 
    language as subsection (a).
        (2) Amend subsection (a) by inserting ``and, subject to the 
    provisions of subsection (b),'' between the words ``United States;'' 
    and ``50 per centum''.
        (3) Add a new subsection (b) as follows:
    ``(b)(1) In calculating the amount to be paid to States during any 
fiscal year under this section or under any other provision of law 
requiring payment to a State of any revenues derived from the leasing of 
any onshore lands or interest in land owned by the United States for the 
production of the same types of minerals leasable under this Act or of 
geothermal steam, 50 percent of the portion of the enacted appropriation 
of the Department of the Interior and any other agency during the 
preceding fiscal year allocable to the administration of all laws 
providing for the leasing of any onshore lands or interest in land owned 
by the United States for the production of the same types of minerals 
leasable under this Act or of geothermal steam, and to enforcement of 
such laws, shall be deducted from the receipts derived under those laws 
in approximately equal amounts each month (subject to paragraph (4)) 
prior to the division and distribution of such receipts between the 
States and the United States.
    ``(2) The proportion of the deduction provided in paragraph (1) 
allocable to each State shall be determined by dividing the monies 
disbursed to the State during the preceding fiscal year derived from 
onshore mineral leasing referred to in paragraph (1) in that State by 
the total money disbursed to States during the preceding fiscal year 
from such onshore mineral leasing in all States.
    ``(3) In the event the deduction apportioned to any State under this 
subsection exceeds 50 percent of the Secretary of the Interior's 
estimate of the amounts attributable to onshore mineral leasing referred 
to in paragraph (1) within that State during the preceding fiscal year, 
the deduction from receipts received from leases in that State shall be 
limited to such estimated amounts and the total amount to be deducted 
from such onshore mineral leasing receipts shall be reduced accordingly.
    ``(4) If the amount otherwise deductible under this subsection in 
any month from the portion of receipts to be distributed to a State 
exceeds the amount payable to the State during that month, any amount 
exceeding the amount payable shall be carried forward and deducted from 
amounts payable to the State in subsequent months. If any amount remains 
to be carried forward at the end of the fiscal year, such amount shall 
not be deducted from any disbursements in any subsequent fiscal year.
    ``(5) All deductions to be made pursuant to this subsection shall be 
made in full during the fiscal year in which such deductions were 
incurred.''.

SEC. 10202. CONFORMING AMENDMENTS.

    (a) Mineral Leasing Act for Acquired Lands.--Section 6(a) of the 
Mineral Leasing Act for Acquired Lands (30 U.S.C. 355) is amended by 
striking ``All receipts'' at the beginning of the first sentence and 
inserting the following: ``Subject to the provisions of section 35(b) of 
the Mineral Leasing Act (30 U.S.C. 191(b)), all receipts''.
    (b) Geothermal Steam Act.--Section 20 of the Geothermal Steam Act 
(30 U.S.C. 1019) is amended by striking ``All moneys'' at the beginning 
thereof and inserting ``Subject to the provisions of section 35(b) of 
the Mineral Leasing Act (30 U.S.C. 191(b)), all moneys''.
           TITLE XI--CIVIL SERVICE AND POST OFFICE PROVISIONS
                        Subtitle A--Civil Service
SEC. 11001. DELAY IN COST-OF-LIVING ADJUSTMENTS IN FEDERAL EMPLOYEE 
RETIREMENT BENEFITS DURING FISCAL YEARS 1994, 1995, AND 1996.
    (a) Applicability.--This section shall apply with respect to any 
cost-of-living increase scheduled to take effect, during fiscal year 
1994, 1995, or 1996, under--
        (1) section 8340(b) or 8462(b) of title 5, United States Code;
        (2) section 826 or 858 of the Foreign Service Act of 1980; or
        (3) section 291 of the Central Intelligence Agency Retirement 
    Act (50 U.S.C. 2131), as set forth in section 802 of the CIARDS 
    Technical Corrections Act of 1992 (Public Law 102-496; 106 Stat. 
    3196).
    (b) Delay in Effective Date of Adjustments.--A cost-of-living 
increase described in subsection (a) shall not take effect until the 
first day of the third calendar month after the date such increase would 
otherwise take effect.
    (c) Rule of Construction.--Nothing in this section shall be 
considered to affect any determination relating to eligibility for an 
annuity increase or the amount of the first increase in an annuity under 
section 8340 (b) or (c) or section 8462 (b) or (c) of title 5, United 
States Code, or comparable provisions of law.
SEC. 11002. PERMANENT ELIMINATION OF THE ALTERNATIVE-FORM-OF-ANNUITY 
OPTION EXCEPT FOR INDIVIDUALS WITH A CRITICAL MEDICAL CONDITION.
    (a) Civil Service Retirement System; Federal Employees' Retirement 
System.--Sections 8343a and 8420a of title 5, United States Code, are 
each amended--
        (1) in subsection (a) by striking ``an employee or Member may,'' 
    and inserting ``any employee or Member who has a life-threatening 
    affliction or other critical medical condition may,''; and
        (2) by striking subsection (f).
    (b) Foreign Service Retirement and Disability System.--Section 
807(e)(1) of the Foreign Service Act of 1980 (22 U.S.C. 4047(e)(1)) is 
amended by striking ``a participant may,'' and inserting ``any 
participant who has a life-threatening affliction or other critical 
medical condition may,''.
    (c) Central Intelligence Agency Retirement and Disability System.--
Section 294(a) of the Central Intelligence Agency Retirement Act (50 
U.S.C. 2143(a)), as set forth in section 802 of the CIARDS Technical 
Corrections Act of 1992 (Public Law 102-496; 106 Stat. 3196), is amended 
by striking ``a participant may,'' and inserting ``any participant who 
has a life-threatening affliction or other critical medical condition 
may,''.
    (d) Effective Date.--The amendments made by this section shall 
become effective on October 1, 1994, and shall apply with respect to any 
annuity commencing on or after that date.
SEC. 11003. APPLICATION OF MEDICARE PART B LIMITS TO PHYSICIANS' 
SERVICES FURNISHED TO FEDERAL EMPLOYEE HEALTH BENEFITS ENROLLEES AGE 65 
OR OLDER.
    (a) In General.--Section 8904(b) of title 5, United States Code, is 
amended--
        (1) in paragraph (1) by inserting ``(A)'' after ``(b)(1)'' and 
    by adding at the end the following:
    ``(B)(i) A plan, other than a prepayment plan described in section 
8903(4), may not provide benefits, in the case of any retired enrolled 
individual who is age 65 or older and is not entitled to Medicare 
supplementary medical insurance benefits under part B of title XVIII of 
the Social Security Act (42 U.S.C. 1395j et seq.), to pay a charge 
imposed for physicians' services (as defined in section 1848(j) of such 
Act, 42 U.S.C. 1395w-4(j)) which are covered for purposes of benefit 
payments under this chapter and under such part, to the extent that such 
charge exceeds the fee schedule amount under section 1848(a) of such Act 
(42 U.S.C. 1395w-4(a)).
    ``(ii) Physicians and suppliers who have in force participation 
agreements with the Secretary of Health and Human Services consistent 
with section 1842(h)(1) of such Act (42 U.S.C. 1395u(h)(1)), whereby the 
participating provider accepts Medicare benefits (including allowable 
deductible and coinsurance amounts) as full payment for covered items 
and services shall accept equivalent benefit and enrollee cost-sharing 
under this chapter as full payment for services described in clause (i). 
Physicians and suppliers who are nonparticipating physicians and 
suppliers for purposes of part B of title XVIII of such Act shall not 
impose charges that exceed the limiting charge under section 1848(g) of 
such Act (42 U.S.C. 1395w-4(g)) with respect to services described in 
clause (i) provided to enrollees described in such clause. The Office of 
Personnel Management shall notify a physician or supplier who is found 
to have violated this clause and inform them of the requirements of this 
clause and sanctions for such a violation. The Office of Personnel 
Management shall notify the Secretary of Health and Human Services if a 
physician or supplier is found to knowingly and willfully violate this 
clause on a repeated basis and the Secretary of Health and Human 
Services may invoke appropriate sanctions in accordance with sections 
1128A(a) and 1848(g)(1) of such Act (42 U.S.C. 1320a-7a(a), 1395w-
4(g)(1)) and applicable regulations.
    ``(C) If the Secretary of Health and Human Services determines that 
a violation of this subsection warrants excluding a provider from 
participation for a specified period under title XVIII of the Social 
Security Act, the Office shall enforce a corresponding exclusion of such 
provider for purposes of this chapter.'';
        (2) in paragraph (3)(B)--
            (A) by inserting ``(i)'' after ``includes''; and
            (B) by inserting before the period at the end the following: 
        ``, and (ii) the fee schedule amounts and limiting charges for 
        physicians' services established under section 1848 of such Act 
        (42 U.S.C. 1395w-4) and the identity of participating physicians 
        and suppliers who have in force agreements with such Secretary 
        under section 1842(h) of such Act (42 U.S.C. 1395u(h))''; and
        (3) by adding at the end the following:
    ``(4) The Director of the Office of Personnel Management shall enter 
into an arrangement with the Secretary of Health and Human Services, to 
be effective before the first day of the fifth month that begins before 
each contract year, under which--
        ``(A) physicians and suppliers (whether or not participating) 
    under the Medicare program will be notified of the requirements of 
    paragraph (1)(B);
        ``(B) enforcement procedures will be in place to carry out such 
    paragraph (including enforcement of protections against overcharging 
    of beneficiaries); and
        ``(C) Medicare program information described in paragraph 
    (3)(B)(ii) will be supplied to carriers under paragraph (3)(A).''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply with respect to contract years beginning on or after January 1, 
1995.
SEC. 11004. FEDERAL EMPLOYEES' SURVIVOR ANNUITY IMPROVEMENTS.
    (a) Civil Service Retirement System.--
        (1) Reduction for spousal annuity.--Section 8339(j) of title 5, 
    United States Code, is amended--
            (A) in paragraph (3)--
                (i) in the second sentence by striking ``, within such 
            2-year period,''; and
                (ii) by striking the fourth sentence and inserting the 
            following: ``The Office shall, by regulation, provide for 
            payment of the deposit required under this paragraph by a 
            reduction in the annuity of the employee or Member. The 
            reduction shall, to the extent practicable, be designed so 
            that the present value of the future reduction is 
            actuarially equivalent to the deposit required under this 
            paragraph, except that the total reductions in the annuity 
            of an employee or Member to pay deposits required by the 
            provisions of this paragraph, paragraph (5), or subsection 
            (k)(2) shall not exceed 25 percent of the annuity computed 
            under subsections (a) through (i), (n), and (q), including 
            adjustments under section 8340. The reduction, which shall 
            be effective on the same date as the election under this 
            paragraph, shall be permanent and unaffected by any future 
            termination of the entitlement of the former spouse. Such 
            reduction shall be independent of and in addition to the 
            reduction required under the first sentence of this 
            paragraph.''; and
            (B) in paragraph (5)(C)--
                (i) in clause (ii) by striking ``, within 2 years after 
            the date of the remarriage or, if later, the death or 
            remarriage of the former spouse (or of the last such 
            surviving former spouse),''; and
                (ii) by amending clause (iii) to read as follows:
            ``(iii) The Office shall, by regulation, provide for payment 
        of the deposit required under clause (ii) by a reduction in the 
        annuity of the employee or Member. The reduction shall, to the 
        extent practicable, be designed so that the present value of the 
        future reduction is actuarially equivalent to the deposit 
        required under clause (ii), except that total reductions in the 
        annuity of an employee or Member to pay deposits required by the 
        provisions of this paragraph or paragraph (3) shall not exceed 
        25 percent of the annuity computed under subsections (a) through 
        (i), (n), and (q), including adjustments under section 8340. The 
        reduction required by this clause, which shall be effective on 
        the same date as the election under clause (i), shall be 
        permanent and unaffected by any future termination of the 
        marriage. Such reduction shall be independent of and in addition 
        to the reduction required under clause (i).''.
        (2) Reduction relating to former spouse.--Section 8339(k)(2) of 
    title 5, United States Code, is amended--
            (A) in subparagraph (B)(ii) by striking ``Within 2 years 
        after the date of the marriage, the'' and inserting ``The''; and
            (B) by amending subparagraph (C) to read as follows:
        ``(C) The Office shall, by regulation, provide for payment of 
    the deposit required under subparagraph (B)(ii) by a reduction in 
    the annuity of the employee or Member. The reduction shall, to the 
    extent practicable, be designed so that the present value of the 
    future reduction is actuarially equivalent to the deposit required 
    under subparagraph (B)(ii), except that total reductions in the 
    annuity of an employee or Member to pay deposits required by this 
    subsection or subsection (j)(3) shall not exceed 25 percent of the 
    annuity computed under subsections (a) through (i), (n), and (q), 
    including adjustments under section 8340. The reduction required by 
    this subparagraph, which shall be effective on the same date as the 
    election under subparagraph (A), shall be permanent and unaffected 
    by any future termination of the marriage. Such reduction shall be 
    independent of and in addition to the reduction required under 
    subparagraph (A).''.
        (3) Deposits.--Section 8334(h) of title 5, United States Code, 
    is amended by striking ``and by section 8339(j)(5)(C) and the last 
    sentence of section 8339(k)(2) of this title''.
    (b) Federal Employees' Retirement System.--Section 8418 of title 5, 
United States Code, is amended--
        (1) in subsection (a)(1) by striking ``, before the expiration 
    of the 2-year period involved,''; and
        (2) by amending subsection (b) to read as follows:
    ``(b) The Office shall, by regulation, provide for payment of the 
deposit required under subsection (a) by a reduction in the annuity of 
the employee or Member. The reduction shall, to the extent practicable, 
be designed so that the present value of the future reduction is 
actuarially equivalent to the deposit required under subsection (a), 
except that the total reductions in the annuity of an employee or Member 
to pay deposits required by this section shall not exceed 25 percent of 
the annuity computed under section 8415 or section 8452, including 
adjustments under section 8462. The reduction required by this 
subsection, which shall be effective at the same time as the election 
under section 8416 (b) and (c) or section 8417(b), shall be permanent 
and unaffected by any future termination of the marriage or the 
entitlement of the former spouse. Such reduction shall be independent of 
and in addition to the reduction required under section 8416 (b) and (c) 
or section 8417(b).''.
    (c) Effective Date.--
        (1) In general.--The amendments made by this section shall take 
    effect on the first day of the first month beginning at least 30 
    days after the date of the enactment of this Act and shall apply to 
    all deposits required under section 8339(j) (3) or (5), 8339(k)(2), 
    or 8418 of title 5, United States Code, on which no payment has been 
    made prior to such effective date.
        (2) Partial deposit.--For any deposit required under section 
    8339(j) (3) or (5), 8339(k)(2), or 8418 of title 5, United States 
    Code, or section 4 (b) or (c) of the Civil Service Retirement Spouse 
    Equity Act of 1984 (5 U.S.C. 8341 note) that has been partially, but 
    not fully, paid before the effective date of this Act, the Office 
    shall by regulation provide for determining the remaining portion of 
    the deposit and for payment of the remaining portion of the deposit 
    by a prospective reduction in the annuity of the employee or Member. 
    The reduction shall be similar to the reductions provided pursuant 
    to the amendments made under this section.
SEC. 11005. TEMPORARY EXTENSION AND MODIFICATION OF THE METHOD FOR 
DETERMINING GOVERNMENT CONTRIBUTIONS UNDER FEHBP IN THE ABSENCE OF A 
GOVERNMENT-WIDE INDEMNITY BENEFIT PLAN.
    Public Law 101-76 (5 U.S.C. 8906 note) is amended by striking the 
matter after the enacting clause and before paragraph (2) of subsection 
(a) and inserting the following:
``That (a)(1) in the administration of chapter 89 of title 5, United 
States Code, for each of contract years 1990 through 1998 (inclusive), 
in order to compute the average subscription charges under section 
8906(a) of such title for such contract years, the subscription charges 
in effect for the indemnity benefit plan on the beginning date of each 
such contract year--
        ``(A) shall be deemed to be the subscription charges which were 
    in effect for such plan on the beginning date of the preceding 
    contract year as adjusted under paragraph (2); or
        ``(B) if subparagraph (A) does not apply, shall be deemed to 
    be--
            ``(i) the subscription charges which were deemed under this 
        Act to have been in effect for such plan with respect to the 
        preceding contract year as adjusted under paragraph (2), except 
        as provided in clause (ii); or
            ``(ii) for each of contract years 1997 and 1998, the 
        subscription charges which would be derived by applying the 
        terms of clause (i), reduced by 1 percent.''.
                       Subtitle B--Postal Service
SEC. 11101. PAYMENTS TO BE MADE BY THE UNITED STATES POSTAL SERVICE.
    (a) Relating to Corrected Calculations for Past Retirement COLAs.--
In addition to any other payments required under section 8348(m) of 
title 5, United States Code, or any other provision of law, the United 
States Postal Service shall pay into the Civil Service Retirement and 
Disability Fund a total of $693,000,000, of which--
        (1) at least one-third shall be paid not later than September 
    30, 1996;
        (2) at least two-thirds shall be paid not later than September 
    30, 1997; and
        (3) any remaining balance shall be paid not later than September 
    30, 1998.
    (b) Relating to Corrected Calculations for Past Health Benefits.--In 
addition to any other payments required under section 8906(g)(2) of 
title 5, United States Code, or any other provision of law, the United 
States Postal Service shall pay into the Employees Health Benefits Fund 
a total of $348,000,000, of which--
        (1) at least one-third shall be paid not later than September 
    30, 1996;
        (2) at least two-thirds shall be paid not later than September 
    30, 1997; and
        (3) any remaining balance shall be paid not later than September 
    30, 1998.
                 TITLE XII--VETERANS' AFFAIRS PROVISIONS

SEC. 12001. SHORT TITLE.

    This title may be cited as the ``Veterans Reconciliation Act of 
1993''.
SEC. 12002. EXTENSION OF AUTHORITY TO REQUIRE THAT CERTAIN VETERANS 
AGREE TO MAKE COPAYMENTS IN EXCHANGE FOR RECEIVING HEALTH-CARE BENEFITS.
    (a) Hospital and Medical Care.--Section 8013(e) of the Omnibus 
Budget Reconciliation Act of 1990 (Public Law 101-508; 38 U.S.C. 1710 
note) is amended--
        (1) by striking out ``September 30, 1992'' in the first sentence 
    and inserting in lieu thereof ``September 30, 1998''; and
        (2) by striking out the second sentence.
    (b) Outpatient Medications.--Section 1722A(c) of title 38, United 
States Code, is amended--
        (1) by striking out ``September 30, 1992'' in the first sentence 
    and inserting in lieu thereof ``September 30, 1998''; and
        (2) by striking out the second sentence.
SEC. 12003. EXTENSION OF AUTHORITY FOR MEDICAL CARE COST RECOVERY.
    Section 1729(a)(2)(E) of title 38, United States Code, is amended by 
striking out ``before August 1, 1994,'' and inserting in lieu thereof 
``before October 1, 1998,''.
SEC. 12004. EXTENSION OF CERTAIN INCOME VERIFICATION AUTHORITY.
    Section 5317(g) of title 38, United States Code, is amended by 
striking out ``September 30, 1997'' and inserting in lieu thereof 
``September 30, 1998''.
SEC. 12005. EXTENSION OF LIMITATION ON PENSION FOR CERTAIN RECIPIENTS OF 
MEDICAID-COVERED NURSING HOME CARE.
    Section 5503(f)(7) of title 38, United States Code, is amended by 
striking out ``September 30, 1997'' and inserting in lieu thereof 
``September 30, 1998''.
SEC. 12006. EXTENSION OF PROCEDURES APPLICABLE TO LIQUIDATION SALES ON 
DEFAULTED HOME LOANS GUARANTEED BY THE DEPARTMENT OF VETERANS AFFAIRS.
    (a) Inclusion of Losses.--Section 3732(c) of title 38, United States 
Code, is amended--
        (1) in paragraph (1)(C), by striking out ``resale,'' and 
    inserting in lieu thereof ``resale (including losses sustained on 
    the resale of the property),''; and
        (2) in paragraph (11), by striking out ``shall'' and all that 
    follows and inserting in lieu thereof ``shall apply to loans closed 
    before October 1, 1998.''.
    (b) Effective Date.--The amendments made by this section shall 
become effective October 1, 1993.

SEC. 12007. LOAN FEES.

    (a) Increase in Home Loan Fees.--Subsection (a) of section 3729 of 
title 38, United States Code, is amended--
        (1) by striking out paragraph (6); and
        (2) by inserting after paragraph (3) the following:
    ``(4) With respect to a loan closed after September 30, 1993, and 
before October 1, 1998, for which a fee is collected under paragraph 
(1), the amount of such fee, as computed under paragraph (2), shall be 
increased by 0.75 percent of the total loan amount other than in the 
case of a loan described in subparagraph (A), (D)(ii), or (E) of 
paragraph (2).''.
    (b) Fee for Multiple Use of Housing Assistance.--Subsection (a) of 
such section, as amended by subsection (a) of this section, is amended 
by adding at the end the following:
    ``(5)(A) Except as provided in subparagraph (B) of this paragraph, 
notwithstanding paragraphs (2) and (4) of this subsection, after a 
veteran has obtained an initial loan pursuant to section 3710 of this 
title, the amount of such fee with respect to any additional loan 
obtained under this chapter by such veteran shall be 3 percent of the 
total loan amount.
    ``(B) Subparagraph (A) of this paragraph does not apply with respect 
to (i) a loan obtained by a veteran with a downpayment described in 
paragraph (2)(B), (2)(C), or (2)(D)(iii) of this subsection, and (ii) 
loans described in paragraph (2)(E) of this subsection.
    ``(C) This paragraph applies with respect to a loan closed after 
September 30, 1993, and before October 1, 1998.''.
    (c) Conforming Amendment.--Paragraph (2) of subsection (a) of such 
section is amended by striking out ``paragraph (6)'' and inserting in 
lieu thereof ``paragraphs (4) and (5)''.
SEC. 12008. POLICY REGARDING COST-OF-LIVING ADJUSTMENT IN COMPENSATION 
RATES.
    (a) Policy.--The fiscal year 1994 cost-of-living adjustments in the 
rates of and limitations for compensation payable under chapter 11 of 
title 38, United States Code, and of dependency and indemnity 
compensation payable under chapter 13 of such title, except as provided 
in subsection (b) of this section, will be no more than a percentage 
equal to the percentage by which benefit amounts payable under title II 
of the Social Security Act (42 U.S.C. 401 et seq.) are increased 
effective December 1, 1993, as a result of a determination under section 
215(i) of such Act (42 U.S.C. 415(i)), with all increased monthly rates 
and limitations (other than increased rates or limitations equal to a 
whole dollar amount) rounded down to the next lower dollar.
    (b) Limitation on Fiscal Year 1994 Cost-of-Living Adjustment for 
Certain DIC Recipients.--(1) During fiscal year 1994, the amount of any 
increase in any of the rates of dependency and indemnity compensation in 
effect under section 1311(a)(3) of title 38, United States Code, will 
not exceed 50 percent of the new law increase, rounded down (if not an 
even dollar amount) to the next lower dollar.
    (2) For purposes of paragraph (1), the new law increase is the 
amount by which the rate of dependency and indemnity compensation 
provided for recipients under section 1311(a)(1) of such title is 
increased for fiscal year 1994.
SEC. 12009. LIMITATION REGARDING COST-OF-LIVING ADJUSTMENTS FOR 
MONTGOMERY GI BILL BENEFITS.
    (a) Benefits Payable Under Chapter 30.--Section 3015(g) of title 38, 
United States Code, is amended--
        (1) by striking out ``(1)'' and all that follows through ``(2)'' 
    and by redesignating subparagraphs (A) and (B) as paragraphs (1) and 
    (2), respectively; and
        (2) in paragraph (2), as redesignated by paragraph (1) of this 
    subsection, by striking out ``subparagraph (A)'' and inserting in 
    lieu thereof ``paragraph (1)''.
    (b) Benefits Payable Under Selected Reserve Program.--Section 
2131(b)(2) of title 10, United States Code, is amended--
        (1) by striking out ``(A)'' the first place it appears and all 
    that follows through ``(B) With respect to'' and inserting in lieu 
    thereof ``With respect to'';
        (2) by redesignating clauses (i) and (ii) as subparagraphs (A) 
    and (B), respectively; and
        (3) in subparagraph (B), as redesignated by paragraph (2) of 
    this subsection, by striking out ``clause (i)'' and inserting in 
    lieu thereof ``subparagraph (A)''.
    (c) Limitation.--The fiscal year 1995 cost-of-living adjustments in 
the rates of educational assistance payable under chapter 30 of title 
38, United States Code, and under chapter 106 of title 10, United States 
Code, shall be the percentage equal to 50 percent of the percentage by 
which such assistance would be increased under section 3015(g) of title 
38, and under section 2131(b)(2) of title 10, United States Code, 
respectively, but for this section.
    (d) Technical Amendments.--(1) Section 301(c) of Public Law 102-568 
(106 Stat. 4326) is amended by striking out ``Section 3015(f)'' and 
inserting in lieu thereof ``Section 3015(g) (as redesignated by section 
307(a)(1))''.
    (2) Section 307(a) of such Public Law (106 Stat. 4328) is amended by 
striking out ``(as amended by section 301)''.
    (3) The amendments made by paragraphs (1) and (2) shall apply as if 
included in the enactment of Public Law 102-568.
  TITLE XIII--REVENUE, HEALTH CARE, HUMAN RESOURCES, INCOME SECURITY, 
    CUSTOMS AND TRADE, FOOD STAMP PROGRAM, AND TIMBER SALE PROVISIONS

                      CHAPTER 1--REVENUE PROVISIONS

SEC. 13001. SHORT TITLE; ETC.

    (a) Short Title.--This chapter may be cited as the ``Revenue 
Reconciliation Act of 1993''.
    (b) Amendment to 1986 Code.--Except as otherwise expressly provided, 
whenever in this chapter an amendment or repeal is expressed in terms of 
an amendment to, or repeal of, a section or other provision, the 
reference shall be considered to be made to a section or other provision 
of the Internal Revenue Code of 1986.
    (c) Section 15 Not To Apply.--Except in the case of the amendments 
made by section 13221 (relating to corporate rate increase), no 
amendment made by this chapter shall be treated as a change in a rate of 
tax for purposes of section 15 of the Internal Revenue Code of 1986.
    (d) Waiver of Estimated Tax Penalties.--No addition to tax shall be 
made under section 6654 or 6655 of the Internal Revenue Code of 1986 for 
any period before April 16, 1994 (March 16, 1994, in the case of a 
corporation), with respect to any underpayment to the extent such 
underpayment was created or increased by any provision of this chapter.
    (e) Table of Contents.--

                      CHAPTER 1--REVENUE PROVISIONS

Sec. 13001. Short title; etc.

            Subchapter A--Training and Investment Incentives

          Part I--Provisions Relating to Education and Training

Sec. 13101. Employer-provided educational assistance.
Sec. 13102. Targeted jobs credit.

                     Part II--Investment Incentives


             SUBPART A--RESEARCH AND CLINICAL TESTING CREDITS

Sec. 13111. Extension of research and clinical testing credits.
Sec. 13112. Modification of fixed base percentage for startup companies.


                    SUBPART B--CAPITAL GAIN PROVISIONS

Sec. 13113. 50-percent exclusion for gain from certain small business 
stock.
Sec. 13114. Rollover of gain from sale of publicly traded securities 
into specialized small business investment companies.


         SUBPART C--MODIFICATION TO MINIMUM TAX DEPRECIATION RULES

Sec. 13115. Modification to minimum tax depreciation rules.


       SUBPART D--INCREASE IN EXPENSE TREATMENT FOR SMALL BUSINESSES

Sec. 13116. Increase in expense treatment for small businesses.


                        SUBPART E--TAX EXEMPT BONDS

Sec. 13121. High-speed intercity rail facility bonds exempt from State 
volume cap.
Sec. 13122. Permanent extension of qualified small issue bonds.

   Part III--Expansion and Simplification of Earned Income Tax Credit

Sec. 13131. Expansion and simplification of earned income tax credit.

            Part IV--Incentives for Investment in Real Estate


     SUBPART A--EXTENSION OF QUALIFIED MORTGAGE BONDS AND LOW-INCOME 
                             HOUSING CREDIT

Sec. 13141. Permanent extension of qualified mortgage bonds.
Sec. 13142. Low-income housing credit.


                       SUBPART B--PASSIVE LOSS RULES

Sec. 13143. Application of passive loss rules to rental real estate 
activities.


   SUBPART C--PROVISIONS RELATING TO REAL ESTATE INVESTMENTS BY PENSION 
                                  FUNDS

Sec. 13144. Real estate property acquired by a qualified organization.
Sec. 13145. Repeal of special treatment of publicly treated 
partnerships.
Sec. 13146. Title-holding companies permitted to receive small amounts 
of unrelated business taxable income.
Sec. 13147. Exclusion from unrelated business tax of gains from certain 
property.
Sec. 13148. Exclusion from unrelated business tax of certain fees and 
option premiums.
Sec. 13149. Treatment of pension fund investments in real estate 
investment trusts.


                   SUBPART D--DISCHARGE OF INDEBTEDNESS

Sec. 13150. Exclusion from gross income for income from discharge of 
qualified real property business indebtedness.


      SUBPART E--INCREASE IN RECOVERY PERIOD FOR NONRESIDENTIAL REAL 
                                PROPERTY

Sec. 13151. Increase in recovery period for nonresidential real 
property.

                           Part V--Luxury Tax

Sec. 13161. Repeal of luxury excise taxes other than on passenger 
vehicles.
Sec. 13162. Exemption from luxury excise tax for certain equipment 
installed on passenger vehicles for use by disabled individuals.
Sec. 13163. Tax on diesel fuel used in noncommercial boats.

                         Part VI--Other Changes

Sec. 13171. Alternative minimum tax treatment of contributions of 
appreciated property.
Sec. 13172. Substantiation requirement for deduction of certain 
charitable contributions.
Sec. 13173. Disclosure related to quid pro quo contributions.
Sec. 13174. Temporary extension of deduction for health insurance costs 
of self-employed individuals.

                     Subchapter B--Revenue Increases

                Part I--Provisions Affecting Individuals


                         SUBPART A--RATE INCREASES

Sec. 13201. Increase in top marginal rate under section 1.
Sec. 13202. Surtax on high-income taxpayers.
Sec. 13203. Modifications to alternative minimum tax rates and exemption 
amounts.
Sec. 13204. Overall limitation on itemized deductions for high-income 
taxpayers made permanent.
Sec. 13205. Phaseout of personal exemption of high-income taxpayers made 
permanent.
Sec. 13206. Provisions to prevent conversion of ordinary income to 
capital gain.


                        SUBPART B--OTHER PROVISIONS

Sec. 13207. Repeal of limitation on amount of wages subject to health 
insurance employment tax.
Sec. 13208. Top estate and gift tax rates made permanent.
Sec. 13209. Reduction in deductible portion of business meals and 
entertainment.
Sec. 13210. Elimination of deduction for club membership fees.
Sec. 13211. Disallowance of deduction for certain employee remuneration 
in excess of $1,000,000.
Sec. 13212. Reduction in compensation taken into account in determining 
contributions and benefits under qualified retirement plans.
Sec. 13213. Modifications to deduction for moving expenses.
Sec. 13214. Simplification of individual estimated tax safe harbor based 
on last year's tax.
Sec. 13215. Social security and tier 1 railroad retirement benefits.

                Part II--Provisions Affecting Businesses

Sec. 13221. Increase in top marginal rate under section 11.
Sec. 13222. Denial of deduction for lobbying expenses.
Sec. 13223. Mark to market accounting method for securities dealers.
Sec. 13224. Clarification of treatment of certain FSLIC financial 
assistance.
Sec. 13225. Modification of corporate estimated tax rules.
Sec. 13226. Modifications of discharge of indebtedness provisions.
Sec. 13227. Limitation on section 936 credit.
Sec. 13228. Modification to limitation on deduction for certain 
interest.

                    Part III--Foreign Tax Provisions


  SUBPART A--CURRENT TAXATION OF CERTAIN EARNINGS OF CONTROLLED FOREIGN 
                              CORPORATIONS

Sec. 13231. Earnings invested in excess passive assets.
Sec. 13232. Modification to taxation of investment in United States 
property.
Sec. 13233. Other modifications to subpart F.


      SUBPART B--ALLOCATION OF RESEARCH AND EXPERIMENTAL EXPENDITURES

Sec. 13234. Allocation of research and experimental expenditures.


                        SUBPART C--OTHER PROVISIONS

Sec. 13235. Repeal of certain exceptions for working capital.
Sec. 13236. Modifications of accuracy-related penalty.
Sec. 13237. Denial of portfolio interest exemption for contingent 
interest.
Sec. 13238. Regulations dealing with conduit arrangements.
Sec. 13239. Treatment of export of certain softwood logs.

                Part IV--Transportation Fuels Provisions


                    SUBPART A--TRANSPORTATION FUELS TAX

Sec. 13241. Transportation fuels tax.


              SUBPART B--MODIFICATIONS TO TAX ON DIESEL FUEL

Sec. 13242. Modifications to tax on diesel fuel.
Sec. 13243. Floor stocks tax.


                        SUBPART C--OTHER PROVISIONS

Sec. 13244. Increased deposits into Mass Transit Account.
Sec. 13245. Floor stocks tax on aviation fuel held on October 1, 1995.

                      Part V--Compliance Provisions

Sec. 13251. Modifications to substantial understatement penalty.
Sec. 13252. Returns relating to the cancellation of indebtedness by 
certain financial entities.

                    Part VI--Treatment of Intangibles

Sec. 13261. Amortization of goodwill and certain other intangibles.
Sec. 13262. Treatment of certain payments to retired or deceased 
partner.

                   Part VII--Miscellaneous Provisions

Sec. 13271. Disallowance of interest on certain overpayments of tax.
Sec. 13272. Denial of deduction relating to travel expenses.
Sec. 13273. Increase in withholding from supplemental wage payments.

     Subchapter C--Empowerment Zones, Enterprise Communities, Rural 
                   Development Investment Areas, Etc.

Part I--Empowerment Zones, Enterprise Communities, and Rural Development 
                            Investment Areas

Sec. 13301. Designation and treatment of empowerment zones, enterprise 
communities, and rural development investment areas.
Sec. 13302. Technical and conforming amendments.
Sec. 13303. Effective date.

   Part II--Credit for Contributions to Certain Community Development 
                              Corporations

Sec. 13311. Credit for contributions to certain community development 
corporations.

               Part III--Investment in Indian Reservations

Sec. 13321. Accelerated depreciation for property on Indian 
reservations.
Sec. 13322. Indian employment credit.

                     Subchapter D--Other Provisions

                      Part I--Disclosure Provisions

Sec. 13401. Disclosure of return information for administration of 
certain veterans programs.
Sec. 13402. Disclosure of return information to carry out income 
contingent repayment of student loans.
Sec. 13403. Use of return information for income verification under 
certain housing assistance programs.

                       Part II--Public Debt Limit

Sec. 13411. Increase in public debt limit.

                      Part III--Vaccine Provisions

Sec. 13421. Excise tax on certain vaccines made permanent.
Sec. 13422. Continuation coverage under group health plans of costs of 
pediatric vaccines.

                   Part IV--Disaster Relief Provisions

Sec. 13431. Modification of involuntary conversion rules for certain 
disaster-related conversions.

                    Part V--Miscellaneous Provisions

Sec. 13441. Increase in presidential election campaign check-off.
Sec. 13442 Special rule for hospital services.
Sec. 13443. Credit for portion of employer social security taxes paid 
with respect to employee cash tips.
Sec. 13444. Availability and use of death information.

            Subchapter A--Training and Investment Incentives

          PART I--PROVISIONS RELATING TO EDUCATION AND TRAINING

SEC. 13101. EMPLOYER-PROVIDED EDUCATIONAL ASSISTANCE.

    (a) Extension of Exclusion.--
        (1) In general.--Subsection (d) of section 127 (relating to 
    educational assistance programs) is amended to read as follows:
    ``(d) Termination.--This section shall not apply to taxable years 
beginning after December 31, 1994.''
        (2) Conforming amendment.--Paragraph (2) of section 103(a) of 
    the Tax Extension Act of 1991 is hereby repealed.
    (b) Coordination With Section 132.--Paragraph (8) of section 132(i) 
is amended to read as follows:
        ``(8) Application of section to otherwise taxable educational or 
    training benefits.--Amounts paid or expenses incurred by the 
    employer for education or training provided to the employee which 
    are not excludable from gross income under section 127 shall be 
    excluded from gross income under this section if (and only if) such 
    amounts or expenses are a working condition fringe.''
    (c) Effective Dates.--
        (1) Subsection (a).--The amendments made by subsection (a) shall 
    apply to taxable years ending after June 30, 1992.
        (2) Subsection (b).--The amendment made by subsection (b) shall 
    apply to taxable years beginning after December 31, 1988.

SEC. 13102. TARGETED JOBS CREDIT.

    (a) Extension of Credit.--Paragraph (4) of section 51(c) (relating 
to termination) is amended by striking ``June 30, 1992'' and inserting 
``December 31, 1994''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to individuals who begin work for the employer after June 30, 
1992.

                     PART II--INVESTMENT INCENTIVES

            Subpart A--Research and Clinical Testing Credits

SEC. 13111. EXTENSION OF RESEARCH AND CLINICAL TESTING CREDITS.
    (a) Research Credit.--
        (1) In general.--Subsection (h) of section 41 (relating to 
    credit for research activities) is amended--
            (A) by striking ``June 30, 1992'' each place it appears and 
        inserting ``June 30, 1995'', and
            (B) by striking ``July 1, 1992'' each place it appears and 
        inserting ``July 1, 1995''.
        (2) Conforming amendment.--Subparagraph (D) of section 28(b)(1) 
    is amended by striking ``June 30, 1992'' and inserting ``June 30, 
    1995''.
    (b) Clinical Testing Credit.--Subsection (e) of section 28 is 
amended by striking ``June 30, 1992'' and inserting ``December 31, 
1994''.
    (c) Effective Date.--The amendments made by this section shall apply 
to taxable years ending after June 30, 1992.
SEC. 13112. MODIFICATION OF FIXED-BASE PERCENTAGE FOR STARTUP COMPANIES.
    (a) General Rule.--Clause (ii) of section 41(c)(3)(B) is amended to 
read as follows:
                ``(ii) Fixed-base percentage.--In a case to which this 
            subparagraph applies, the fixed-base percentage is--

                    ``(I) 3 percent for each of the taxpayer's 1st 5 
                taxable years beginning after December 31, 1993, for 
                which the taxpayer has qualified research expenses,
                    ``(II) in the case of the taxpayer's 6th such 
                taxable year, \1/6\ of the percentage which the 
                aggregate qualified research expenses of the taxpayer 
                for the 4th and 5th such taxable years is of the 
                aggregate gross receipts of the taxpayer for such years,
                    ``(III) in the case of the taxpayer's 7th such 
                taxable year, \1/3\ of the percentage which the 
                aggregate qualified research expenses of the taxpayer 
                for the 5th and 6th such taxable years is of the 
                aggregate gross receipts of the taxpayer for such years,
                    ``(IV) in the case of the taxpayer's 8th such 
                taxable year, \1/2\ of the percentage which the 
                aggregate qualified research expenses of the taxpayer 
                for the 5th, 6th, and 7th such taxable years is of the 
                aggregate gross receipts of the taxpayer for such years,
                    ``(V) in the case of the taxpayer's 9th such taxable 
                year, \2/3\ of the percentage which the aggregate 
                qualified research expenses of the taxpayer for the 5th, 
                6th, 7th, and 8th such taxable years is of the aggregate 
                gross receipts of the taxpayer for such years,
                    ``(VI) in the case of the taxpayer's 10th such 
                taxable year, \5/6\ of the percentage which the 
                aggregate qualified research expenses of the taxpayer 
                for the 5th, 6th, 7th, 8th, and 9th such taxable years 
                is of the aggregate gross receipts of the taxpayer for 
                such years, and
                    ``(VII) for taxable years thereafter, the percentage 
                which the aggregate qualified research expenses for any 
                5 taxable years selected by the taxpayer from among the 
                5th through the 10th such taxable years is of the 
                aggregate gross receipts of the taxpayer for such 
                selected years.''.

    (b) Conforming Amendments.--
        (1) Clause (iii) of section 41(c)(3)(B) is amended by striking 
    ``clause (i)'' and inserting ``clauses (i) and (ii)''.
        (2) Subparagraph (D) of section 41(c)(3) is amended by striking 
    ``subparagraph (A)'' and inserting ``subparagraphs (A) and 
    (B)(ii)''.
    (c) Effective Date.--The amendments made by this section shall apply 
to taxable years beginning after December 31, 1993.

                   Subpart B--Capital Gain Provisions

SEC. 13113. 50-PERCENT EXCLUSION FOR GAIN FROM CERTAIN SMALL BUSINESS 
STOCK.
    (a) General Rule.--Part I of subchapter P of chapter 1 (relating to 
capital gains and losses) is amended by adding at the end thereof the 
following new section:
``SEC. 1202. 50-PERCENT EXCLUSION FOR GAIN FROM CERTAIN SMALL BUSINESS 
STOCK.
    ``(a) 50-Percent Exclusion.--In the case of a taxpayer other than a 
corporation, gross income shall not include 50 percent of any gain from 
the sale or exchange of qualified small business stock held for more 
than 5 years.
    ``(b) Per-Issuer Limitation on Taxpayer's Eligible Gain.--
        ``(1) In general.--If the taxpayer has eligible gain for the 
    taxable year from 1 or more dispositions of stock issued by any 
    corporation, the aggregate amount of such gain from dispositions of 
    stock issued by such corporation which may be taken into account 
    under subsection (a) for the taxable year shall not exceed the 
    greater of--
            ``(A) $10,000,000 reduced by the aggregate amount of 
        eligible gain taken into account by the taxpayer under 
        subsection (a) for prior taxable years and attributable to 
        dispositions of stock issued by such corporation, or
            ``(B) 10 times the aggregate adjusted bases of qualified 
        small business stock issued by such corporation and disposed of 
        by the taxpayer during the taxable year.
    For purposes of subparagraph (B), the adjusted basis of any stock 
    shall be determined without regard to any addition to basis after 
    the date on which such stock was originally issued.
        ``(2) Eligible gain.--For purposes of this subsection, the term 
    `eligible gain' means any gain from the sale or exchange of 
    qualified small business stock held for more than 5 years.
        ``(3) Treatment of married individuals.--
            ``(A) Separate returns.--In the case of a separate return by 
        a married individual, paragraph (1)(A) shall be applied by 
        substituting `$5,000,000' for `$10,000,000'.
            ``(B) Allocation of exclusion.--In the case of any joint 
        return, the amount of gain taken into account under subsection 
        (a) shall be allocated equally between the spouses for purposes 
        of applying this subsection to subsequent taxable years.
            ``(C) Marital status.--For purposes of this subsection, 
        marital status shall be determined under section 7703.
    ``(c) Qualified Small Business Stock.--For purposes of this 
section--
        ``(1) In general.--Except as otherwise provided in this section, 
    the term `qualified small business stock' means any stock in a C 
    corporation which is originally issued after the date of the 
    enactment of the Revenue Reconciliation Act of 1993, if--
            ``(A) as of the date of issuance, such corporation is a 
        qualified small business, and
            ``(B) except as provided in subsections (f) and (h), such 
        stock is acquired by the taxpayer at its original issue 
        (directly or through an underwriter)--
                ``(i) in exchange for money or other property (not 
            including stock), or
                ``(ii) as compensation for services provided to such 
            corporation (other than services performed as an underwriter 
            of such stock).
        ``(2) Active business requirement; etc.--
            ``(A) In general.--Stock in a corporation shall not be 
        treated as qualified small business stock unless, during 
        substantially all of the taxpayer's holding period for such 
        stock, such corporation meets the active business requirements 
        of subsection (e) and such corporation is a C corporation.
            ``(B) Special rule for certain small business investment 
        companies.--
                ``(i) Waiver of active business requirement.--
            Notwithstanding any provision of subsection (e), a 
            corporation shall be treated as meeting the active business 
            requirements of such subsection for any period during which 
            such corporation qualifies as a specialized small business 
            investment company.
                ``(ii) Specialized small business investment company.--
            For purposes of clause (i), the term `specialized small 
            business investment company' means any eligible corporation 
            (as defined in subsection (e)(4)) which is licensed to 
            operate under section 301(d) of the Small Business 
            Investment Act of 1958 (as in effect on May 13, 1993).
        ``(3) Certain purchases by corporation of its own stock.--
            ``(A) Redemptions from taxpayer or related person.--Stock 
        acquired by the taxpayer shall not be treated as qualified small 
        business stock if, at any time during the 4-year period 
        beginning on the date 2 years before the issuance of such stock, 
        the corporation issuing such stock purchased (directly or 
        indirectly) any of its stock from the taxpayer or from a person 
        related (within the meaning of section 267(b) or 707(b)) to the 
        taxpayer.
            ``(B) Significant redemptions.--Stock issued by a 
        corporation shall not be treated as qualified business stock if, 
        during the 2-year period beginning on the date 1 year before the 
        issuance of such stock, such corporation made 1 or more 
        purchases of its stock with an aggregate value (as of the time 
        of the respective purchases) exceeding 5 percent of the 
        aggregate value of all of its stock as of the beginning of such 
        2-year period.
            ``(C) Treatment of certain transactions.--If any transaction 
        is treated under section 304(a) as a distribution in redemption 
        of the stock of any corporation, for purposes of subparagraphs 
        (A) and (B), such corporation shall be treated as purchasing an 
        amount of its stock equal to the amount treated as such a 
        distribution under section 304(a).
    ``(d) Qualified Small Business.--For purposes of this section--
        ``(1) In general.--The term `qualified small business' means any 
    domestic corporation which is a C corporation if--
            ``(A) the aggregate gross assets of such corporation (or any 
        predecessor thereof) at all times on or after the date of the 
        enactment of the Revenue Reconciliation Act of 1993 and before 
        the issuance did not exceed $50,000,000,
            ``(B) the aggregate gross assets of such corporation 
        immediately after the issuance (determined by taking into 
        account amounts received in the issuance) do not exceed 
        $50,000,000, and
            ``(C) such corporation agrees to submit such reports to the 
        Secretary and to shareholders as the Secretary may require to 
        carry out the purposes of this section.
        ``(2) Aggregate gross assets.--
            ``(A) In general.--For purposes of paragraph (1), the term 
        `aggregate gross assets' means the amount of cash and the 
        aggregate adjusted bases of other property held by the 
        corporation.
            ``(B) Treatment of contributed property.--For purposes of 
        subparagraph (A), the adjusted basis of any property contributed 
        to the corporation (or other property with a basis determined in 
        whole or in part by reference to the adjusted basis of property 
        so contributed) shall be determined as if the basis of the 
        property contributed to the corporation (immediately after such 
        contribution) were equal to its fair market value as of the time 
        of such contribution.
        ``(3) Aggregation rules.--
            ``(A) In general.--All corporations which are members of the 
        same parent-subsidiary controlled group shall be treated as 1 
        corporation for purposes of this subsection.
            ``(B) Parent-subsidiary controlled group.--For purposes of 
        subparagraph (A), the term `parent-subsidiary controlled group' 
        means any controlled group of corporations as defined in section 
        1563(a)(1), except that--
                ``(i) `more than 50 percent' shall be substituted for 
            `at least 80 percent' each place it appears in section 
            1563(a)(1), and
                ``(ii) section 1563(a)(4) shall not apply.
    ``(e) Active Business Requirement.--
        ``(1) In general.--For purposes of subsection (c)(2), the 
    requirements of this subsection are met by a corporation for any 
    period if during such period--
            ``(A) at least 80 percent (by value) of the assets of such 
        corporation are used by such corporation in the active conduct 
        of 1 or more qualified trades or businesses, and
            ``(B) such corporation is an eligible corporation.
        ``(2) Special rule for certain activities.--For purposes of 
    paragraph (1), if, in connection with any future qualified trade or 
    business, a corporation is engaged in--
            ``(A) start-up activities described in section 195(c)(1)(A),
            ``(B) activities resulting in the payment or incurring of 
        expenditures which may be treated as research and experimental 
        expenditures under section 174, or
            ``(C) activities with respect to in-house research expenses 
        described in section 41(b)(4),
    assets used in such activities shall be treated as used in the 
    active conduct of a qualified trade or business. Any determination 
    under this paragraph shall be made without regard to whether a 
    corporation has any gross income from such activities at the time of 
    the determination.
        ``(3) Qualified trade or business.--For purposes of this 
    subsection, the term `qualified trade or business' means any trade 
    or business other than--
            ``(A) any trade or business involving the performance of 
        services in the fields of health, law, engineering, 
        architecture, accounting, actuarial science, performing arts, 
        consulting, athletics, financial services, brokerage services, 
        or any trade or business where the principal asset of such trade 
        or business is the reputation or skill of 1 or more of its 
        employees,
            ``(B) any banking, insurance, financing, leasing, investing, 
        or similar business,
            ``(C) any farming business (including the business of 
        raising or harvesting trees),
            ``(D) any business involving the production or extraction of 
        products of a character with respect to which a deduction is 
        allowable under section 613 or 613A, and
            ``(E) any business of operating a hotel, motel, restaurant, 
        or similar business.
        ``(4) Eligible corporation.--For purposes of this subsection, 
    the term `eligible corporation' means any domestic corporation; 
    except that such term shall not include--
            ``(A) a DISC or former DISC,
            ``(B) a corporation with respect to which an election under 
        section 936 is in effect or which has a direct or indirect 
        subsidiary with respect to which such an election is in effect,
            ``(C) a regulated investment company, real estate investment 
        trust, or REMIC, and
            ``(D) a cooperative.
        ``(5) Stock in other corporations.--
            ``(A) Look-thru in case of subsidiaries.--For purposes of 
        this subsection, stock and debt in any subsidiary corporation 
        shall be disregarded and the parent corporation shall be deemed 
        to own its ratable share of the subsidiary's assets, and to 
        conduct its ratable share of the subsidiary's activities.
            ``(B) Portfolio stock or securities.--A corporation shall be 
        treated as failing to meet the requirements of paragraph (1) for 
        any period during which more than 10 percent of the value of its 
        assets (in excess of liabilities) consists of stock or 
        securities in other corporations which are not subsidiaries of 
        such corporation (other than assets described in paragraph (6)).
            ``(C) Subsidiary.--For purposes of this paragraph, a 
        corporation shall be considered a subsidiary if the parent owns 
        more than 50 percent of the combined voting power of all classes 
        of stock entitled to vote, or more than 50 percent in value of 
        all outstanding stock, of such corporation.
        ``(6) Working capital.--For purposes of paragraph (1)(A), any 
    assets which--
            ``(A) are held as a part of the reasonably required working 
        capital needs of a qualified trade or business of the 
        corporation, or
            ``(B) are held for investment and are reasonably expected to 
        be used within 2 years to finance research and experimentation 
        in a qualified trade or business or increases in working capital 
        needs of a qualified trade or business,
    shall be treated as used in the active conduct of a qualified trade 
    or business. For periods after the corporation has been in existence 
    for at least 2 years, in no event may more than 50 percent of the 
    assets of the corporation qualify as used in the active conduct of a 
    qualified trade or business by reason of this paragraph.
        ``(7) Maximum real estate holdings.--A corporation shall not be 
    treated as meeting the requirements of paragraph (1) for any period 
    during which more than 10 percent of the total value of its assets 
    consists of real property which is not used in the active conduct of 
    a qualified trade or business. For purposes of the preceding 
    sentence, the ownership of, dealing in, or renting of real property 
    shall not be treated as the active conduct of a qualified trade or 
    business.
        ``(8) Computer software royalties.--For purposes of paragraph 
    (1), rights to computer software which produces active business 
    computer software royalties (within the meaning of section 
    543(d)(1)) shall be treated as an asset used in the active conduct 
    of a trade or business.
    ``(f) Stock Acquired on Conversion of Other Stock.--If any stock in 
a corporation is acquired solely through the conversion of other stock 
in such corporation which is qualified small business stock in the hands 
of the taxpayer--
        ``(1) the stock so acquired shall be treated as qualified small 
    business stock in the hands of the taxpayer, and
        ``(2) the stock so acquired shall be treated as having been held 
    during the period during which the converted stock was held.
    ``(g) Treatment of Pass-Thru Entities.--
        ``(1) In general.--If any amount included in gross income by 
    reason of holding an interest in a pass-thru entity meets the 
    requirements of paragraph (2)--
            ``(A) such amount shall be treated as gain described in 
        subsection (a), and
            ``(B) for purposes of applying subsection (b), such amount 
        shall be treated as gain from a disposition of stock in the 
        corporation issuing the stock disposed of by the pass-thru 
        entity and the taxpayer's proportionate share of the adjusted 
        basis of the pass-thru entity in such stock shall be taken into 
        account.
        ``(2) Requirements.--An amount meets the requirements of this 
    paragraph if--
            ``(A) such amount is attributable to gain on the sale or 
        exchange by the pass-thru entity of stock which is qualified 
        small business stock in the hands of such entity (determined by 
        treating such entity as an individual) and which was held by 
        such entity for more than 5 years, and
            ``(B) such amount is includible in the gross income of the 
        taxpayer by reason of the holding of an interest in such entity 
        which was held by the taxpayer on the date on which such pass-
        thru entity acquired such stock and at all times thereafter 
        before the disposition of such stock by such pass-thru entity.
        ``(3) Limitation based on interest originally held by 
    taxpayer.--Paragraph (1) shall not apply to any amount to the extent 
    such amount exceeds the amount to which paragraph (1) would have 
    applied if such amount were determined by reference to the interest 
    the taxpayer held in the pass-thru entity on the date the qualified 
    small business stock was acquired.
        ``(4) Pass-thru entity.--For purposes of this subsection, the 
    term `pass-thru entity' means--
            ``(A) any partnership,
            ``(B) any S corporation,
            ``(C) any regulated investment company, and
            ``(D) any common trust fund.
    ``(h) Certain Tax-Free and Other Transfers.--For purposes of this 
section--
        ``(1) In general.--In the case of a transfer described in 
    paragraph (2), the transferee shall be treated as--
            ``(A) having acquired such stock in the same manner as the 
        transferor, and
            ``(B) having held such stock during any continuous period 
        immediately preceding the transfer during which it was held (or 
        treated as held under this subsection) by the transferor.
        ``(2) Description of transfers.--A transfer is described in this 
    subsection if such transfer is--
            ``(A) by gift,
            ``(B) at death, or
            ``(C) from a partnership to a partner of stock with respect 
        to which requirements similar to the requirements of subsection 
        (g) are met at the time of the transfer (without regard to the 
        5-year holding period requirement).
        ``(3) Certain rules made applicable.--Rules similar to the rules 
    of section 1244(d)(2) shall apply for purposes of this section.
        ``(4) Incorporations and reorganizations involving nonqualified 
    stock.--
            ``(A) In general.--In the case of a transaction described in 
        section 351 or a reorganization described in section 368, if 
        qualified small business stock is exchanged for other stock 
        which would not qualify as qualified small business stock but 
        for this subparagraph, such other stock shall be treated as 
        qualified small business stock acquired on the date on which the 
        exchanged stock was acquired.
            ``(B) Limitation.--This section shall apply to gain from the 
        sale or exchange of stock treated as qualified small business 
        stock by reason of subparagraph (A) only to the extent of the 
        gain which would have been recognized at the time of the 
        transfer described in subparagraph (A) if section 351 or 368 had 
        not applied at such time. The preceding sentence shall not apply 
        if the stock which is treated as qualified small business stock 
        by reason of subparagraph (A) is issued by a corporation which 
        (as of the time of the transfer described in subparagraph (A)) 
        is a qualified small business.
            ``(C) Successive application.--For purposes of this 
        paragraph, stock treated as qualified small business stock under 
        subparagraph (A) shall be so treated for subsequent transactions 
        or reorganizations, except that the limitation of subparagraph 
        (B) shall be applied as of the time of the first transfer to 
        which such limitation applied (determined after the application 
        of the second sentence of subparagraph (B)).
            ``(D) Control test.--In the case of a transaction described 
        in section 351, this paragraph shall apply only if, immediately 
        after the transaction, the corporation issuing the stock owns 
        directly or indirectly stock representing control (within the 
        meaning of section 368(c)) of the corporation whose stock was 
        exchanged.
    ``(i) Basis Rules.--For purposes of this section--
        ``(1) Stock exchanged for property.--In the case where the 
    taxpayer transfers property (other than money or stock) to a 
    corporation in exchange for stock in such corporation--
            ``(A) such stock shall be treated as having been acquired by 
        the taxpayer on the date of such exchange, and
            ``(B) the basis of such stock in the hands of the taxpayer 
        shall in no event be less than the fair market value of the 
        property exchanged.
        ``(2) Treatment of contributions to capital.--If the adjusted 
    basis of any qualified small business stock is adjusted by reason of 
    any contribution to capital after the date on which such stock was 
    originally issued, in determining the amount of the adjustment by 
    reason of such contribution, the basis of the contributed property 
    shall in no event be treated as less than its fair market value on 
    the date of the contribution.
    ``(j) Treatment of Certain Short Positions.--
        ``(1) In general.--If the taxpayer has an offsetting short 
    position with respect to any qualified small business stock, 
    subsection (a) shall not apply to any gain from the sale or exchange 
    of such stock unless--
            ``(A) such stock was held by the taxpayer for more than 5 
        years as of the first day on which there was such a short 
        position, and
            ``(B) the taxpayer elects to recognize gain as if such stock 
        were sold on such first day for its fair market value.
        ``(2) Offsetting short position.--For purposes of paragraph (1), 
    the taxpayer shall be treated as having an offsetting short position 
    with respect to any qualified small business stock if--
            ``(A) the taxpayer has made a short sale of substantially 
        identical property,
            ``(B) the taxpayer has acquired an option to sell 
        substantially identical property at a fixed price, or
            ``(C) to the extent provided in regulations, the taxpayer 
        has entered into any other transaction which substantially 
        reduces the risk of loss from holding such qualified small 
        business stock.
    For purposes of the preceding sentence, any reference to the 
    taxpayer shall be treated as including a reference to any person who 
    is related (within the meaning of section 267(b) or 707(b)) to the 
    taxpayer.
    ``(k) Regulations.--The Secretary shall prescribe such regulations 
as may be appropriate to carry out the purposes of this section, 
including regulations to prevent the avoidance of the purposes of this 
section through split-ups, shell corporations, partnerships, or 
otherwise.''
    (b) One-Half of Exclusion Treated as Preference for Minimum Tax.--
        (1) In general.--Subsection (a) of section 57 (relating to items 
    of tax preference) is amended by adding at the end thereof the 
    following new paragraph:
        ``(8) Exclusion for gains on sale of certain small business 
    stock.--An amount equal to one-half of the amount excluded from 
    gross income for the taxable year under section 1202.''
        (2) Conforming amendment.--Subclause (II) of section 
    53(d)(1)(B)(ii) is amended by striking ``and (6)'' and inserting 
    ``(6), and (8)''.
    (c) Penalty for Failure To Comply With Reporting Requirements.--
Section 6652 is amended by inserting before the last subsection thereof 
the following new subsection:
    ``(k) Failure To Make Reports Required Under Section 1202.--In the 
case of a failure to make a report required under section 1202(d)(1)(C) 
which contains the information required by such section on the date 
prescribed therefor (determined with regard to any extension of time for 
filing), there shall be paid (on notice and demand by the Secretary and 
in the same manner as tax) by the person failing to make such report, an 
amount equal to $50 for each report with respect to which there was such 
a failure. In the case of any failure due to negligence or intentional 
disregard, the preceding sentence shall be applied by substituting 
`$100' for `$50'. In the case of a report covering periods in 2 or more 
years, the penalty determined under preceding provisions of this 
subsection shall be multiplied by the number of such years.''
    (d) Conforming Amendments.--
        (1)(A) Section 172(d)(2) (relating to modifications with respect 
    to net operating loss deduction) is amended to read as follows:
        ``(2) Capital gains and losses of taxpayers other than 
    corporations.--In the case of a taxpayer other than a corporation--
            ``(A) the amount deductible on account of losses from sales 
        or exchanges of capital assets shall not exceed the amount 
        includable on account of gains from sales or exchanges of 
        capital assets; and
            ``(B) the exclusion provided by section 1202 shall not be 
        allowed.''
        (B) Subparagraph (B) of section 172(d)(4) is amended by 
    inserting ``, (2)(B),'' after ``paragraph (1)''.
        (2) Paragraph (4) of section 642(c) is amended to read as 
    follows:
        ``(4) Adjustments.--To the extent that the amount otherwise 
    allowable as a deduction under this subsection consists of gain 
    described in section 1202(a), proper adjustment shall be made for 
    any exclusion allowable to the estate or trust under section 1202. 
    In the case of a trust, the deduction allowed by this subsection 
    shall be subject to section 681 (relating to unrelated business 
    income).''
        (3) Paragraph (3) of section 643(a) is amended by adding at the 
    end thereof the following new sentence: ``The exclusion under 
    section 1202 shall not be taken into account.''.
        (4) Paragraph (4) of section 691(c) is amended by striking 
    ``1201, and 1211'' and inserting ``1201, 1202, and 1211''.
        (5) The second sentence of paragraph (2) of section 871(a) is 
    amended by inserting ``such gains and losses shall be determined 
    without regard to section 1202 and'' after ``except that''.
        (6) The table of sections for part I of subchapter P of chapter 
    1 is amended by adding after the item relating to section 1201 the 
    following new item:
        ``Sec. 1202. 50-percent exclusion for gain from certain small 
                  business stock.''

    (e) Effective Date.--The amendments made by this section shall apply 
to stock issued after the date of the enactment of this Act.
SEC. 13114. ROLLOVER OF GAIN FROM SALE OF PUBLICLY TRADED SECURITIES 
INTO SPECIALIZED SMALL BUSINESS INVESTMENT COMPANIES.
    (a) In General.--Part III of subchapter O of chapter 1 (relating to 
common nontaxable exchanges) is amended by adding at the end the 
following new section:
``SEC. 1044. ROLLOVER OF PUBLICLY TRADED SECURITIES GAIN INTO 
SPECIALIZED SMALL BUSINESS INVESTMENT COMPANIES.
    ``(a) Nonrecognition of Gain.--In the case of the sale of any 
publicly traded securities with respect to which the taxpayer elects the 
application of this section, gain from such sale shall be recognized 
only to the extent that the amount realized on such sale exceeds--
        ``(1) the cost of any common stock or partnership interest in a 
    specialized small business investment company purchased by the 
    taxpayer during the 60-day period beginning on the date of such 
    sale, reduced by
        ``(2) any portion of such cost previously taken into account 
    under this section.
This section shall not apply to any gain which is treated as ordinary 
income for purposes of this subtitle.
    ``(b) Limitations.--
        ``(1) Limitation on individuals.--In the case of an individual, 
    the amount of gain which may be excluded under subsection (a) for 
    any taxable year shall not exceed the lesser of--
            ``(A) $50,000, or
            ``(B) $500,000, reduced by the amount of gain excluded under 
        subsection (a) for all preceding taxable years.
        ``(2) Limitation on c corporations.--In the case of a C 
    corporation, the amount of gain which may be excluded under 
    subsection (a) for any taxable year shall not exceed the lesser of--
            ``(A) $250,000, or
            ``(B) $1,000,000, reduced by the amount of gain excluded 
        under subsection (a) for all preceding taxable years.
        ``(3) Special rules for married individuals.--For purposes of 
    this subsection--
            ``(A) Separate returns.--In the case of a separate return by 
        a married individual, paragraph (1) shall be applied by 
        substituting `$25,000' for `$50,000' and `$250,000' for 
        `$500,000'.
            ``(B) Allocation of gain.--In the case of any joint return, 
        the amount of gain excluded under subsection (a) for any taxable 
        year shall be allocated equally between the spouses for purposes 
        of applying this subsection to subsequent taxable years.
            ``(C) Marital status.--For purposes of this subsection, 
        marital status shall be determined under section 7703.
        ``(4) Special rules for c corporation.--For purposes of this 
    subsection--
            ``(A) all corporations which are members of the same 
        controlled group of corporations (within the meaning of section 
        52(a)) shall be treated as 1 taxpayer, and
            ``(B) any gain excluded under subsection (a) by a 
        predecessor of any C corporation shall be treated as having been 
        excluded by such C corporation.
    ``(c) Definitions and Special Rules.--For purposes of this section--
        ``(1) Publicly traded securities.--The term `publicly traded 
    securities' means securities which are traded on an established 
    securities market.
        ``(2) Purchase.--The term `purchase' has the meaning given such 
    term by section 1043(b)(4).
        ``(3) Specialized small business investment company.--The term 
    `specialized small business investment company' means any 
    partnership or corporation which is licensed by the Small Business 
    Administration under section 301(d) of the Small Business Investment 
    Act of 1958 (as in effect on May 13, 1993).
        ``(4) Certain entities not eligible.--This section shall not 
    apply to any estate, trust, partnership, or S corporation.
    ``(d) Basis Adjustments.--If gain from any sale is not recognized by 
reason of subsection (a), such gain shall be applied to reduce (in the 
order acquired) the basis for determining gain or loss of any common 
stock or partnership interest in any specialized small business 
investment company which is purchased by the taxpayer during the 60-day 
period described in subsection (a). This subsection shall not apply for 
purposes of section 1202.''
    (b) Conforming Amendment.--Paragraph (24) of section 1016(a) is 
amended--
        (1) by striking ``section 1043'' and inserting ``section 1043 or 
    1044'', and
        (2) by striking ``section 1043(c)'' and inserting ``section 
    1043(c) or 1044(d), as the case may be''.
    (c) Clerical Amendment.--The table of sections for part III of 
subchapter O of chapter 1 is amended by adding at the end the following 
new item:
        ``Sec. 1044. Rollover of publicly traded securities gain into 
                  specialized small business investment companies.''

    (d) Effective Date.--The amendments made by this section shall apply 
to sales on and after the date of the enactment of this Act, in taxable 
years ending on and after such date.

        Subpart C--Modification to Minimum Tax Depreciation Rules

SEC. 13115. MODIFICATION TO MINIMUM TAX DEPRECIATION RULES.
    (a) Elimination of ACE Depreciation Adjustment.--Clause (i) of 
section 56(g)(4)(A) (relating to depreciation adjustments for computing 
adjusted current earnings) is amended by adding at the end thereof the 
following new sentence: ``The preceding sentence shall not apply to any 
property placed in service after December 31, 1993, and the depreciation 
deduction with respect to such property shall be determined under the 
rules of subsection (a)(1)(A).''.
    (b) Effective Dates.--
        (1) In general.--Except as provided in paragraph (2), the 
    amendments made by this section shall apply to property placed in 
    service after December 31, 1993.
        (2) Coordination with transitional rules.--The amendments made 
    by this section shall not apply to any property to which paragraph 
    (1) of section 56(a) of the Internal Revenue Code of 1986 does not 
    apply by reason of subparagraph (C)(i) thereof.

      Subpart D--Increase in Expense Treatment for Small Businesses

SEC. 13116. INCREASE IN EXPENSE TREATMENT FOR SMALL BUSINESSES.
    (a) General Rule.--Paragraph (1) of section 179(b) (relating to 
dollar limitation) is amended by striking ``$10,000'' and inserting 
``$17,500''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to taxable years beginning after December 31, 1992.

                       Subpart E--Tax Exempt Bonds

SEC. 13121. HIGH-SPEED INTERCITY RAIL FACILITY BONDS EXEMPT FROM STATE 
VOLUME CAP.
    (a) In General.--Paragraph (4) of section 146(g) (relating to 
exemption for certain bonds) is amended by adding at the end thereof the 
following flush sentence:
``Paragraph (4) shall be applied without regard to `75 percent of' if 
all of the property to be financed by the net proceeds of the issue is 
to be owned by a governmental unit (within the meaning of section 
142(b)(1)).''
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to bonds issued after December 31, 1993.
SEC. 13122. PERMANENT EXTENSION OF QUALIFIED SMALL ISSUE BONDS.
    (a) In General.--Subparagraph (B) of section 144(a)(12) is amended 
to read as follows:
            ``(B) Bonds issued to finance manufacturing facilities and 
        farm property.--Subparagraph (A) shall not apply to any bond 
        issued as part of an issue 95 percent or more of the net 
        proceeds of which are to be used to provide--
                ``(i) any manufacturing facility, or
                ``(ii) any land or property in accordance with section 
            147(c)(2).''
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to bonds issued after June 30, 1992.
    (c) Treatment Under Inducement Regulations.--If the 1-year period 
specified in Treasury Regulation §1.103-8(a)(5) (as in effect 
before July 1, 1993) or any successor regulation would (but for this 
subsection) expire after June 30, 1992, and before January 1, 1994, such 
period shall not expire before January 1, 1994.

   PART III--EXPANSION AND SIMPLIFICATION OF EARNED INCOME TAX CREDIT

SEC. 13131. EXPANSION AND SIMPLIFICATION OF EARNED INCOME TAX CREDIT.
    (a) General Rule.--Section 32 (relating to earned income credit) is 
amended by striking subsections (a) and (b) and inserting the following:
    ``(a) Allowance of Credit.--
        ``(1) In general.--In the case of an eligible individual, there 
    shall be allowed as a credit against the tax imposed by this 
    subtitle for the taxable year an amount equal to the credit 
    percentage of so much of the taxpayer's earned income for the 
    taxable year as does not exceed the earned income amount.
        ``(2) Limitation.--The amount of the credit allowable to a 
    taxpayer under paragraph (1) for any taxable year shall not exceed 
    the excess (if any) of--
            ``(A) the credit percentage of the earned income amount, 
        over
            ``(B) the phaseout percentage of so much of the adjusted 
        gross income (or, if greater, the earned income) of the taxpayer 
        for the taxable year as exceeds the phaseout amount.
    ``(b) Percentages and Amounts.--For purposes of subsection (a)--
        ``(1) Percentages.--The credit percentage and the phaseout 
    percentage shall be determined as follows:
            ``(A) In general.--In the case of taxable years beginning 
        after 1995:


                                                                                                                                                              
                                              In the case of an eligible individual with:       The credit percentage is:        The phaseout percentage is:  
                                                                                                                                                              
                                                1 qualifying child........................  34..............................                15.98             
                                                2 or more qualifying children.............  40..............................                21.06             
                                                No qualifying children....................   7.65...........................                 7.65             
                                                                                                                                                              

  
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            ``(B) Transitional percentages for 1995.--In the case of 
        taxable years beginning in 1995:


                                                                                                                                                              
                                              In the case of an eligible individual with:       The credit percentage is:        The phaseout percentage is:  
                                                                                                                                                              
                                                1 qualifying child........................  34..............................                15.98             
                                                2 or more qualifying children.............  36..............................                20.22             
                                                No qualifying children....................   7.65...........................                 7.65             
                                                                                                                                                              

  
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            ``(C) Transitional percentages for 1994.--In the case of a 
        taxable year beginning in 1994:


                                                                                                                                                              
                                              In the case of an eligible individual with:       The credit percentage is:        The phaseout percentage is:  
                                                                                                                                                              
                                                1 qualifying child........................  26.3............................                15.98             
                                                2 or more qualifying children.............  30..............................                17.68             
                                                No qualifying children....................   7.65...........................                 7.65             
                                                                                                                                                              

  
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        ``(2) Amounts.--The earned income amount and the phaseout amount 
    shall be determined as follows:
            ``(A) In general.--In the case of taxable years beginning 
        after 1994:


                                                                                                                                                              
                                              In the case of an eligible individual with:     The earned income amount is:         The phaseout amount is:    
                                                                                                                                                              
                                                1 qualifying child........................  $6,000..........................               $11,000            
                                                2 or more qualifying children.............  $8,425..........................               $11,000            
                                                No qualifying children....................  $4,000..........................                $5,000            
                                                                                                                                                              

  
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            ``(B) Transitional amounts.--In the case of a taxable year 
        beginning in 1994:


                                                                                                                                                              
                                              In the case of an eligible individual with:     The earned income amount is:         The phaseout amount is:    
                                                                                                                                                              
                                                1 qualifying child........................  $7,750..........................              $11,000             
                                                2 or more qualifying children.............  $8,425..........................              $11,000             
                                                No qualifying children....................  $4,000..........................              $5,000''.           
                                                                                                                                                              

  
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    (b) Eligible Individual.--Subparagraph (A) of section 32(c)(1) 
(defining eligible individual) is amended to read as follows:<!!>
            ``(A) In general.--The term `eligible individual' means--
                ``(i) any individual who has a qualifying child for the 
            taxable year, or
                ``(ii) any other individual who does not have a 
            qualifying child for the taxable year, if--

                    ``(I) such individual's principal place of abode is 
                in the United States for more than one-half of such 
                taxable year,
                    ``(II) such individual (or, if the individual is 
                married, either the individual or the individual's 
                spouse) has attained age 25 but not attained age 65 
                before the close of the taxable year, and

                    ``(III) such individual is not a dependent for whom 
                a deduction is allowable under section 151 to another 
                taxpayer for any taxable year beginning in the same 
                calendar year as such taxable year.

            For purposes of the preceding sentence, marital status shall 
            be determined under section 7703.''
    (c) Inflation Adjustments.--Section 32(i) (relating to inflation 
adjustments) is amended--
        (1) by striking paragraphs (1) and (2) and inserting the 
    following new paragraph:
        ``(1) In general.--In the case of any taxable year beginning 
    after 1994, each dollar amount contained in subsection (b)(2)(A) 
    shall be increased by an amount equal to--
            ``(A) such dollar amount, multiplied by
            ``(B) the cost-of-living adjustment determined under section 
        1(f)(3), for the calendar year in which the taxable year begins, 
        by substituting `calendar year 1993' for `calendar year 
        1992'.'', and
        (2) by redesignating paragraph (3) as paragraph (2).
    (d) Conforming Amendments.--
        (1) Subparagraph (D) of section 32(c)(3) is amended--
            (A) by striking ``clause (i) or (ii)'' in clause (iii) and 
        inserting ``clause (i)'',
            (B) by striking clause (ii), and
            (C) by redesignating clause (iii) as clause (ii).
        (2) Paragraph (3) of section 162(l) is amended to read as 
    follows:
        ``(3) Coordination with medical deduction.--Any amount paid by a 
    taxpayer for insurance to which paragraph (1) applies shall not be 
    taken into account in computing the amount allowable to the taxpayer 
    as a deduction under section 213(a).''
        (3) Section 213 is amended by striking subsection (f).
        (4) Subsection (b) of section 3507 is amended by redesignating 
    paragraphs (2) and (3) as paragraphs (3) and (4), respectively, and 
    by inserting after paragraph (1) the following new paragraph:
        ``(2) certifies that the employee has 1 or more qualifying 
    children (within the meaning of section 32(c)(3)) for such taxable 
    year,''.
        (5) Subparagraph (B) of section 3507(c)(2) is amended by 
    striking clauses (i) and (ii) and inserting the following:
                ``(i) of not more than 60 percent of the credit 
            percentage in effect under section 32(b)(1) for an eligible 
            individual with 1 qualifying child and with earned income 
            not in excess of the earned income amount in effect under 
            section 32(b)(2) for such an eligible individual, which
                ``(ii) phases out at 60 percent of the phaseout 
            percentage in effect under section 32(b)(1) for such an 
            eligible individual between the phaseout amount in effect 
            under section 32(b)(2) for such an eligible individual and 
            the amount of earned income at which the credit under 
            section 32(a) phases out for such an eligible individual, 
            or''.
        (6) Section 3507 is amended by adding at the end thereof the 
    following new subsection:
    ``(f) Internal Revenue Service Notification.--The Internal Revenue 
Service shall take such steps as may be appropriate to ensure that 
taxpayers who have 1 or more qualifying children and who receive a 
refund of the credit under section 32 are aware of the availability of 
earned income advance amounts under this section.''
    (e) Effective Date.--The amendments made by this section shall apply 
to taxable years beginning after December 31, 1993.

            PART IV--INCENTIVES FOR INVESTMENT IN REAL ESTATE

Subpart A--Extension of Qualified Mortgage Bonds and Low-Income Housing 
                                 Credit

SEC. 13141. PERMANENT EXTENSION OF QUALIFIED MORTGAGE BONDS.
    (a) In General.--Paragraph (1) of section 143(a) (defining qualified 
mortgage bond) is amended to read as follows:
        ``(1) Qualified mortgage bond defined.--For purposes of this 
    title, the term `qualified mortgage bond' means a bond which is 
    issued as part of a qualified mortgage issue.''
    (b) Mortgage Credit Certificates.--Section 25 is amended by striking 
subsection (h) and by redesignating subsections (i) and (j) as 
subsections (h) and (i), respectively.
    (c) Treatment of Resale Price Control and Subsidy Lien Programs.--
Subsection (k) of section 143 is amended by adding at the end thereof 
the following new paragraph:
        ``(10) Treatment of resale price control and subsidy lien 
    programs.--
            ``(A) In general.--In the case of a residence which is 
        located in a high housing cost area (as defined in section 
        143(f)(5)), the interest of a governmental unit in such 
        residence by reason of financing provided under any qualified 
        program shall not be taken into account under this section 
        (other than subsection (m)), and the acquisition cost of the 
        residence which is taken into account under subsection (e) shall 
        be such cost reduced by the amount of such financing.
            ``(B) Qualified program.--For purposes of subparagraph (A), 
        the term `qualified program' means any governmental program 
        providing mortgage loans (other than 1st mortgage loans) or 
        grants--
                ``(i) which restricts (throughout the 9-year period 
            beginning on the date the financing is provided) the resale 
            of the residence to a purchaser qualifying under this 
            section and to a price determined by an index that reflects 
            less than the full amount of any appreciation in the 
            residence's value, or
                ``(ii) which provides for deferred or reduced interest 
            payments on such financing and grants the governmental unit 
            a share in the appreciation of the residence,
        but only if such financing is not provided directly or 
        indirectly through the use of any tax-exempt private activity 
        bond.''
    (d) Financing Allowed for Contract for Deed Agreements.--
        (1) In general.--Paragraph (2) of section 143(d) (relating to 
    exceptions to 3-year requirement) is amended--
            (A) by striking ``and'' at the end of subparagraph (A),
            (B) by adding ``and'' at the end of subparagraph (B), and
            (C) by inserting after subparagraph (B) the following new 
        subparagraph:
            ``(C) financing with respect to land described in subsection 
        (i)(1)(C) and the construction of any residence thereon.''
        (2) Exception to new mortgage requirement.--Paragraph (1) of 
    section 143(i) (relating to mortgages must be new mortgages) is 
    amended by adding at the end thereof the following new subparagraph:
            ``(C) Exception for certain contract for deed agreements.--
                ``(i) In general.--In the case of land possessed under a 
            contract for deed by a mortgagor--

                    ``(I) whose principal residence (within the meaning 
                of section 1034) is located on such land, and
                    ``(II) whose family income (as defined in subsection 
                (f)(2)) is not more than 50 percent of applicable median 
                family income (as defined in subsection (f)(4)),

            the contract for deed shall not be treated as an existing 
            mortgage for purposes of subparagraph (A).
                ``(ii) Contract for deed defined.--For purposes of this 
            subparagraph, the term `contract for deed' means a seller-
            financed contract for the conveyance of land under which--

                    ``(I) legal title does not pass to the purchaser 
                until the consideration under the contract is fully paid 
                to the seller, and

                    ``(II) the seller's remedy for nonpayment is 
                forfeiture rather than judicial or nonjudicial 
                foreclosure.''

        (3) Acquisition cost includes cost of land.--Clause (iii) of 
    section 143(k)(3)(B) is amended by inserting ``(other than land 
    described in subsection (i)(1)(C)(i))'' after ``cost of land''.
    (e) Financing of New 2-Family Residences Permitted.--Paragraph (7) 
of section 143(k) is amended by adding at the end thereof the following 
flush sentence:
    ``Subparagraph (B) shall not apply to any 2-family residence if the 
    residence is a targeted area residence and the family income of the 
    mortgagor meets the requirement of subsection (f)(3)(B).''
    (f) Effective Dates.--
        (1) Bonds.--The amendment made by subsection (a) shall apply to 
    bonds issued after June 30, 1992.
        (2) Certificates.--The amendment made by subsection (b) shall 
    apply to elections for periods after June 30, 1992.
        (3) Subsections (c) and (e).--The amendments made by subsections 
    (c) and (e) shall apply to qualified mortgage bonds issued and 
    mortgage credit certificates provided on or after the date of 
    enactment of this Act.
        (4) Contract for deed agreements.--The amendments made by 
    subsection (d) shall apply to loans originated and credit 
    certificates provided after the date of the enactment of this Act.

SEC. 13142. LOW-INCOME HOUSING CREDIT.

    (a) Permanent Extension.--
        (1) In general.--Section 42 (relating to low-income housing 
    credit) is amended by striking subsection (o).
        (2) Effective date.--The amendment made by paragraph (1) shall 
    apply to periods ending after June 30, 1992.
    (b) Modifications.--
        (1) Housing credit agency determination of reasonableness of 
    project costs.--Subparagraph (B) of section 42(m)(2) (relating to 
    credit allocated to building not to exceed amount necessary to 
    assure project feasibility) is amended--
            (A) by striking ``and'' at the end of clause (ii),
            (B) by striking the period at the end of clause (iii) and 
        inserting ``, and'', and
            (C) by inserting after clause (iii) the following new 
        clause:
                ``(iv) the reasonableness of the developmental and 
            operational costs of the project.''
        (2) Units with certain full-time students not disqualified.--
    Subparagraph (D) of section 42(i)(3) (defining low-income unit) is 
    amended to read as follows:
            ``(D) Certain students not to disqualify unit.--A unit shall 
        not fail to be treated as a low-income unit merely because it is 
        occupied--
                ``(i) by an individual who is--

                    ``(I) a student and receiving assistance under title 
                IV of the Social Security Act, or
                    ``(II) enrolled in a job training program receiving 
                assistance under the Job Training Partnership Act or 
                under other similar Federal, State, or local laws, or

                ``(ii) entirely by full-time students if such students 
            are--

                    ``(I) single parents and their children and such 
                parents and children are not dependents (as defined in 
                section 152) of another individual, or
                    ``(II) married and file a joint return.''

        (3) Treasury waivers of certain de minimis errors and 
    recertifications.--Subsection (g) of section 42 (relating to 
    qualified low-income housing projects) is amended by adding at the 
    end thereof the following new paragraph:
        ``(8) Waiver of certain de minimis errors and 
    recertifications.--On application by the taxpayer, the Secretary may 
    waive--
            ``(A) any recapture under subsection (j) in the case of any 
        de minimis error in complying with paragraph (1), or
            ``(B) any annual recertification of tenant income for 
        purposes of this subsection, if the entire building is occupied 
        by low-income tenants.''
        (4) Discrimination against tenants prohibited.--Section 
    42(h)(6)(B) (defining extended low-income housing commitment) is 
    amended by redesignating clauses (iv) and (v) as clauses (v) and 
    (vi) and by inserting after clause (iii) the following new clause:
                ``(iv) which prohibits the refusal to lease to a holder 
            of a voucher or certificate of eligibility under section 8 
            of the United States Housing Act of 1937 because of the 
            status of the prospective tenant as such a holder,''.
        (5) HOME assistance not to result in certain buildings being 
    federally subsidized.--Paragraph (2) of section 42(i) (relating to 
    determination of whether building is federally subsidized) is 
    amended by adding at the end thereof the following new subparagraph:
            ``(E) Buildings receiving home assistance.--
                ``(i) In general.--Assistance provided under the HOME 
            Investment Partnerships Act (as in effect on the date of the 
            enactment of this subparagraph) with respect to any building 
            shall not be taken into account under subparagraph (D) if 40 
            percent or more of the residential units in the building are 
            occupied by individuals whose income is 50 percent or less 
            of area median gross income. Subsection (d)(5)(C) shall not 
            apply to any building to which the preceding sentence 
            applies.
                ``(ii) Special rule for certain high-cost housing 
            areas.--In the case of a building located in a city 
            described in section 142(d)(6), clause (i) shall be applied 
            by substituting `25 percent' for `40 percent'.''
        (6) Effective dates.--
            (A) In general.--Except as provided in subparagraphs (B) and 
        (C), the amendments made by this subsection shall apply to--
                (i) determinations under section 42 of the Internal 
            Revenue Code of 1986 with respect to housing credit dollar 
            amounts allocated from State housing credit ceilings after 
            June 30, 1992, or
                (ii) buildings placed in service after June 30, 1992, to 
            the extent paragraph (1) of section 42(h) of such Code does 
            not apply to any building by reason of paragraph (4) 
            thereof, but only with respect to bonds issued after such 
            date.
            (B) Waiver authority and prohibited discrimination.--The 
        amendments made by paragraphs (3) and (4) shall take effect on 
        the date of the enactment of this Act.
            (C) HOME assistance.--The amendment made by paragraph (2) 
        shall apply to periods after the date of the enactment of this 
        Act.
    (c) Election To Determine Rent Limitation Based on Number of 
Bedrooms and Deep Rent Skewing.--
        (1) In the case of a building to which the amendments made by 
    subsection (e)(1) or (n)(2) of section 7108 of the Revenue 
    Reconciliation Act of 1989 did not apply, the taxpayer may elect to 
    have such amendments apply to such building if the taxpayer has met 
    the requirements of the procedures described in section 
    42(m)(1)(B)(iii) of the Internal Revenue Code of 1986.
        (2) In the case of the amendment made by such subsection (e)(1), 
    such election shall apply only with respect to tenants first 
    occupying any unit in the building after the date of the election.
        (3) In the case of the amendment made by such subsection (n)(2), 
    such election shall apply only if rents of low-income tenants in 
    such building do not increase as a result of such election.
        (4) An election under this subsection may be made only during 
    the 180-day period beginning on the date of the enactment of this 
    Act and, once made, shall be irrevocable.

                      Subpart B--Passive Loss Rules

SEC. 13143. APPLICATION OF PASSIVE LOSS RULES TO RENTAL REAL ESTATE 
ACTIVITIES.
    (a) Rental Real Estate Activities of Persons in Real Property 
Business Not Automatically Treated as Passive Activities.--Subsection 
(c) of section 469 (defining passive activity) is amended by adding at 
the end thereof the following new paragraph:
        ``(7) Special rules for taxpayers in real property business.--
            ``(A) In general.--If this paragraph applies to any taxpayer 
        for a taxable year--
                ``(i) paragraph (2) shall not apply to any rental real 
            estate activity of such taxpayer for such taxable year, and
                ``(ii) this section shall be applied as if each interest 
            of the taxpayer in rental real estate were a separate 
            activity.
        Notwithstanding clause (ii), a taxpayer may elect to treat all 
        interests in rental real estate as one activity. Nothing in the 
        preceding provisions of this subparagraph shall be construed as 
        affecting the determination of whether the taxpayer materially 
        participates with respect to any interest in a limited 
        partnership as a limited partner.
            ``(B) Taxpayers to whom paragraph applies.--This paragraph 
        shall apply to a taxpayer for a taxable year if--
                ``(i) more than one-half of the personal services 
            performed in trades or businesses by the taxpayer during 
            such taxable year are performed in real property trades or 
            businesses in which the taxpayer materially participates, 
            and
                ``(ii) such taxpayer performs more than 750 hours of 
            services during the taxable year in real property trades or 
            businesses in which the taxpayer materially participates.
        In the case of a joint return, the requirements of the preceding 
        sentence are satisfied if and only if either spouse separately 
        satisfies such requirements. For purposes of the preceding 
        sentence, activities in which a spouse materially participates 
        shall be determined under subsection (h).
            ``(C) Real property trade or business.--For purposes of this 
        paragraph, the term `real property trade or business' means any 
        real property development, redevelopment, construction, 
        reconstruction, acquisition, conversion, rental, operation, 
        management, leasing, or brokerage trade or business.
            ``(D) Special rules for subparagraph (b).--
                ``(i) Closely held c corporations.--In the case of a 
            closely held C corporation, the requirements of subparagraph 
            (B) shall be treated as met for any taxable year if more 
            than 50 percent of the gross receipts of such corporation 
            for such taxable year are derived from real property trades 
            or businesses in which the corporation materially 
            participates.
                ``(ii) Personal services as an employee.--For purposes 
            of subparagraph (B), personal services performed as an 
            employee shall not be treated as performed in real property 
            trades or businesses. The preceding sentence shall not apply 
            if such employee is a 5-percent owner (as defined in section 
            416(i)(1)(B)) in the employer.''
    (b) Conforming Amendments.--
        (1) Paragraph (2) of section 469(c) is amended by striking 
    ``The'' and inserting ``Except as provided in paragraph (7), the''.
        (2) Clause (iv) of section 469(i)(3)(E) is amended by inserting 
    ``or any loss allowable by reason of subsection (c)(7)'' after 
    ``loss''.
    (c) Effective Date.--The amendments made by this section shall apply 
to taxable years beginning after December 31, 1993.

  Subpart C--Provisions Relating to Real Estate Investments by Pension 
                                  Funds

SEC. 13144. REAL ESTATE PROPERTY ACQUIRED BY A QUALIFIED ORGANIZATION.
    (a) Modifications of Exceptions.--Paragraph (9) of section 514(c) 
(relating to real property acquired by a qualified organization) is 
amended by adding at the end thereof the following new subparagraphs:
            ``(G) Special rules for purposes of the exceptions.--Except 
        as otherwise provided by regulations--
                ``(i) Small leases disregarded.--For purposes of clauses 
            (iii) and (iv) of subparagraph (B), a lease to a person 
            described in such clause (iii) or (iv) shall be disregarded 
            if no more than 25 percent of the leasable floor space in a 
            building (or complex of buildings) is covered by the lease 
            and if the lease is on commercially reasonable terms.
                ``(ii) Commercially reasonable financing.--Clause (v) of 
            subparagraph (B) shall not apply if the financing is on 
            commercially reasonable terms.
            ``(H) Qualifying sales by financial institutions.--
                ``(i) In general.--In the case of a qualifying sale by a 
            financial institution, except as provided in regulations, 
            clauses (i) and (ii) of subparagraph (B) shall not apply 
            with respect to financing provided by such institution for 
            such sale.
                ``(ii) Qualifying sale.--For purposes of this clause, 
            there is a qualifying sale by a financial institution if--

                    ``(I) a qualified organization acquires property 
                described in clause (iii) from a financial institution 
                and any gain recognized by the financial institution 
                with respect to the property is ordinary income,
                    ``(II) the stated principal amount of the financing 
                provided by the financial institution does not exceed 
                the amount of the outstanding indebtedness (including 
                accrued but unpaid interest) of the financial 
                institution with respect to the property described in 
                clause (iii) immediately before the acquisition referred 
                to in clause (iii) or (v), whichever is applicable, and
                    ``(III) the present value (determined as of the time 
                of the sale and by using the applicable Federal rate 
                determined under section 1274(d)) of the maximum amount 
                payable pursuant to the financing that is determined by 
                reference to the revenue, income, or profits derived 
                from the property cannot exceed 30 percent of the total 
                purchase price of the property (including the contingent 
                payments).

                ``(iii) Property to which subparagraph applies.--
            Property is described in this clause if such property is 
            foreclosure property, or is real property which--

                    ``(I) was acquired by the qualified organization 
                from a financial institution which is in conservatorship 
                or receivership, or from the conservator or receiver of 
                such an institution, and
                    ``(II) was held by the financial institution at the 
                time it entered into conservatorship or receivership.

                ``(iv) Financial institution.--For purposes of this 
            subparagraph, the term `financial institution' means--

                    ``(I) any financial institution described in section 
                581 or 591(a),
                    ``(II) any other corporation which is a direct or 
                indirect subsidiary of an institution referred to in 
                subclause (I) but only if, by virtue of being affiliated 
                with such institution, such other corporation is subject 
                to supervision and examination by a Federal or State 
                agency which regulates institutions referred to in 
                subclause (I), and
                    ``(III) any person acting as a conservator or 
                receiver of an entity referred to in subclause (I) or 
                (II) (or any government agency or corporation succeeding 
                to the rights or interest of such person).

                ``(v) Foreclosure property.--For purposes of this 
            subparagraph, the term `foreclosure property' means any real 
            property acquired by the financial institution as the result 
            of having bid on such property at foreclosure, or by 
            operation of an agreement or process of law, after there was 
            a default (or a default was imminent) on indebtedness which 
            such property secured.''.
    (b) Conforming Amendment.--Paragraph (9) of section 514(c) is 
amended--
        (1) by adding the following new sentence at the end of 
    subparagraph (A): ``For purposes of this paragraph, an interest in a 
    mortgage shall in no event be treated as real property.'', and
        (2) by striking the last sentence of subparagraph (B).
    (c) Effective Dates.--
        (1) In general.--The amendments made by this section shall apply 
    to acquisitions on or after January 1, 1994.
        (2) Small leases.--The provisions of section 514(c)(9)(G)(i) of 
    the Internal Revenue Code of 1986 shall, in addition to any leases 
    to which the provisions apply by reason of paragraph (1), apply to 
    leases entered into on or after January 1, 1994.
SEC. 13145. REPEAL OF SPECIAL TREATMENT OF PUBLICLY TREATED 
PARTNERSHIPS.
    (a) General Rule.--Subsection (c) of section 512 is amended--
        (1) by striking paragraph (2),
        (2) by redesignating paragraph (3) as paragraph (2), and
        (3) by striking ``paragraph (1) or (2)'' in paragraph (2) (as so 
    redesignated) and inserting ``paragraph (1)''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to partnership years beginning on or after January 1, 1994.
SEC. 13146. TITLE-HOLDING COMPANIES PERMITTED TO RECEIVE SMALL AMOUNTS 
OF UNRELATED BUSINESS TAXABLE INCOME.
    (a) General Rule.--Paragraph (25) of section 501(c) is amended by 
adding at the end thereof the following new subparagraph:
            ``(G)(i) An organization shall not be treated as failing to 
        be described in this paragraph merely by reason of the receipt 
        of any otherwise disqualifying income which is incidentally 
        derived from the holding of real property.
            ``(ii) Clause (i) shall not apply if the amount of gross 
        income described in such clause exceeds 10 percent of the 
        organization's gross income for the taxable year unless the 
        organization establishes to the satisfaction of the Secretary 
        that the receipt of gross income described in clause (i) in 
        excess of such limitation was inadvertent and reasonable steps 
        are being taken to correct the circumstances giving rise to such 
        income.''
    (b) Conforming Amendment.--Paragraph (2) of section 501(c) is 
amended by adding at the end thereof the following new sentence: ``Rules 
similar to the rules of subparagraph (G) of paragraph (25) shall apply 
for purposes of this paragraph.''
    (c) Effective Date.--The amendments made by this section shall apply 
to taxable years beginning on or after January 1, 1994.
SEC. 13147. EXCLUSION FROM UNRELATED BUSINESS TAX OF GAINS FROM CERTAIN 
PROPERTY.
    (a) General Rule.--Subsection (b) of section 512 (relating to 
modifications) is amended by adding at the end thereof the following new 
paragraph:
        ``(16)(A) Notwithstanding paragraph (5)(B), there shall be 
    excluded all gains or losses from the sale, exchange, or other 
    disposition of any real property described in subparagraph (B) if--
            ``(i) such property was acquired by the organization from--
                ``(I) a financial institution described in section 581 
            or 591(a) which is in conservatorship or receivership, or
                ``(II) the conservator or receiver of such an 
            institution (or any government agency or corporation 
            succeeding to the rights or interests of the conservator or 
            receiver),
            ``(ii) such property is designated by the organization 
        within the 9-month period beginning on the date of its 
        acquisition as property held for sale, except that not more than 
        one-half (by value determined as of such date) of property 
        acquired in a single transaction may be so designated,
            ``(iii) such sale, exchange, or disposition occurs before 
        the later of--
                ``(I) the date which is 30 months after the date of the 
            acquisition of such property, or
                ``(II) the date specified by the Secretary in order to 
            assure an orderly disposition of property held by persons 
            described in subparagraph (A), and
            ``(iv) while such property was held by the organization, the 
        aggregate expenditures on improvements and development 
        activities included in the basis of the property are (or were) 
        not in excess of 20 percent of the net selling price of such 
        property.
        ``(B) Property is described in this subparagraph if it is real 
    property which--
            ``(i) was held by the financial institution at the time it 
        entered into conservatorship or receivership, or
            ``(ii) was foreclosure property (as defined in section 
        514(c)(9)(H)(v)) which secured indebtedness held by the 
        financial institution at such time.
    For purposes of this subparagraph, real property includes an 
    interest in a mortgage.''
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to property acquired on or after January 1, 1994.
SEC. 13148. EXCLUSION FROM UNRELATED BUSINESS TAX OF CERTAIN FEES AND 
OPTION PREMIUMS.
    (a) Loan Commitment Fees.--Paragraph (1) of section 512(b) (relating 
to modifications) is amended by inserting ``amounts received or accrued 
as consideration for entering into agreements to make loans,'' before 
``and annuities''.
    (b) Option Premiums.--The second sentence of section 512(b)(5) is 
amended--
        (1) by striking ``all gains on'' and inserting ``all gains or 
    losses recognized, in connection with the organization's investment 
    activities, from'',
        (2) by striking ``, written by the organization in connection 
    with its investment activities,'' and
        (3) by inserting ``or real property and all gains or losses from 
    the forfeiture of good-faith deposits (that are consistent with 
    established business practice) for the purchase, sale, or lease of 
    real property in connection with the organization's investment 
    activities'' before the period.
    (c) Effective Date.--The amendments made by this section shall apply 
to amounts received on or after January 1, 1994.
SEC. 13149. TREATMENT OF PENSION FUND INVESTMENTS IN REAL ESTATE 
INVESTMENT TRUSTS.
    (a) General Rule.--Subsection (h) of section 856 (relating to 
closely held determinations) is amended by adding at the end thereof the 
following new paragraph:
        ``(3) Treatment of trusts described in section 401(a).--
            ``(A) Look-thru treatment.--
                ``(i) In general.--Except as provided in clause (ii), in 
            determining whether the stock ownership requirement of 
            section 542(a)(2) is met for purposes of paragraph (1)(A), 
            any stock held by a qualified trust shall be treated as held 
            directly by its beneficiaries in proportion to their 
            actuarial interests in such trust and shall not be treated 
            as held by such trust.
                ``(ii) Certain related trusts not eligible.--Clause (i) 
            shall not apply to any qualified trust if one or more 
            disqualified persons (as defined in section 4975(e)(2), 
            without regard to subparagraphs (B) and (I) thereof) with 
            respect to such qualified trust hold in the aggregate 5 
            percent or more in value of the interests in the real estate 
            investment trust and such real estate investment trust has 
            accumulated earnings and profits attributable to any period 
            for which it did not qualify as a real estate investment 
            trust.
            ``(B) Coordination with personal holding company rules.--If 
        any entity qualifies as a real estate investment trust for any 
        taxable year by reason of subparagraph (A), such entity shall 
        not be treated as a personal holding company for such taxable 
        year for purposes of part II of subchapter G of this chapter.
            ``(C) Treatment for purposes of unrelated business tax.--If 
        any qualified trust holds more than 10 percent (by value) of the 
        interests in any pension-held REIT at any time during a taxable 
        year, the trust shall be treated as having for such taxable year 
        gross income from an unrelated trade or business in an amount 
        which bears the same ratio to the aggregate dividends paid (or 
        treated as paid) by the REIT to the trust for the taxable year 
        of the REIT with or within which the taxable year of the trust 
        ends (the `REIT year') as--
                ``(i) the gross income (less direct expenses related 
            thereto) of the REIT for the REIT year from unrelated trades 
            or businesses (determined as if the REIT were a qualified 
            trust), bears to
                ``(ii) the gross income (less direct expenses related 
            thereto) of the REIT for the REIT year.
        This subparagraph shall apply only if the ratio determined under 
        the preceding sentence is at least 5 percent.
            ``(D) Pension-held reit.--The purposes of subparagraph (C)--
                ``(i) In general.--A real estate investment trust is a 
            pension-held REIT if such trust would not have qualified as 
            a real estate investment trust but for the provisions of 
            this paragraph and if such trust is predominantly held by 
            qualified trusts.
                ``(ii) Predominantly held.--For purposes of clause (i), 
            a real estate investment trust is predominantly held by 
            qualified trusts if--

                    ``(I) at least 1 qualified trust holds more than 25 
                percent (by value) of the interests in such real estate 
                investment trust, or
                    ``(II) 1 or more qualified trusts (each of whom own 
                more than 10 percent by value of the interests in such 
                real estate investment trust) hold in the aggregate more 
                than 50 percent (by value) of the interests in such real 
                estate investment trust.

            ``(E) Qualified trust.--For purposes of this paragraph, the 
        term `qualified trust' means any trust described in section 
        401(a) and exempt from tax under section 501(a).''
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 1993.

                  Subpart D--Discharge of Indebtedness

SEC. 13150. EXCLUSION FROM GROSS INCOME FOR INCOME FROM DISCHARGE OF 
QUALIFIED REAL PROPERTY BUSINESS INDEBTEDNESS.
    (a) In General.--Paragraph (1) of section 108(a) (relating to income 
from discharge of indebtedness) is amended by striking ``or'' at the end 
of subparagraph (B), by striking the period at the end of subparagraph 
(C) and inserting ``, or'', and by adding at the end the following new 
subparagraph:
        ``(D) in the case of a taxpayer other than a C corporation, the 
    indebtedness discharged is qualified real property business 
    indebtedness.''
    (b) Qualified Real Property Business Indebtedness.--Section 108 is 
amended by inserting after subsection (b) the following new subsection:
    ``(c) Treatment of Discharge of Qualified Real Property Business 
Indebtedness.--
        ``(1) Basis reduction.--
            ``(A) In general.--The amount excluded from gross income 
        under subparagraph (D) of subsection (a)(1) shall be applied to 
        reduce the basis of the depreciable real property of the 
        taxpayer.
            ``(B) Cross reference.--For provisions making the reduction 
        described in subparagraph (A), see section 1017.
        ``(2) Limitations.--
            ``(A) Indebtedness in excess of value.--The amount excluded 
        under subparagraph (D) of subsection (a)(1) with respect to any 
        qualified real property business indebtedness shall not exceed 
        the excess (if any) of--
                ``(i) the outstanding principal amount of such 
            indebtedness (immediately before the discharge), over
                ``(ii) the fair market value of the real property 
            described in paragraph (3)(A) (as of such time), reduced by 
            the outstanding principal amount of any other qualified real 
            property business indebtedness secured by such property (as 
            of such time).
            ``(B) Overall limitation.--The amount excluded under 
        subparagraph (D) of subsection (a)(1) shall not exceed the 
        aggregate adjusted bases of depreciable real property 
        (determined after any reductions under subsections (b) and (g)) 
        held by the taxpayer immediately before the discharge (other 
        than depreciable real property acquired in contemplation of such 
        discharge).
        ``(3) Qualified real property business indebtedness.--The term 
    `qualified real property business indebtedness' means indebtedness 
    which--
            ``(A) was incurred or assumed by the taxpayer in connection 
        with real property used in a trade or business and is secured by 
        such real property,
            ``(B) was incurred or assumed before January 1, 1993, or if 
        incurred or assumed on or after such date, is qualified 
        acquisition indebtedness, and
            ``(C) with respect to which such taxpayer makes an election 
        to have this paragraph apply.
    Such term shall not include qualified farm indebtedness. 
    Indebtedness under subparagraph (B) shall include indebtedness 
    resulting from the refinancing of indebtedness under subparagraph 
    (B) (or this sentence), but only to the extent it does not exceed 
    the amount of the indebtedness being refinanced.
        ``(4) Qualified acquisition indebtedness.--For purposes of 
    paragraph (3)(B), the term `qualified acquisition indebtedness' 
    means, with respect to any real property described in paragraph 
    (3)(A), indebtedness incurred or assumed to acquire, construct, 
    reconstruct, or substantially improve such property.
        ``(5) Regulations.--The Secretary shall issue such regulations 
    as are necessary to carry out this subsection, including regulations 
    preventing the abuse of this subsection through cross-
    collateralization or other means.''
    (c) Technical Amendments.--
        (1) Subparagraph (A) of section 108(a)(2) is amended by striking 
    ``and (C)'' and inserting ``, (C), and (D)''.
        (2) Subparagraph (B) of section 108(a)(2) is amended to read as 
    follows:
            ``(B) Insolvency exclusion takes precedence over qualified 
        farm exclusion and qualified real property business exclusion.--
        Subparagraphs (C) and (D) of paragraph (1) shall not apply to a 
        discharge to the extent the taxpayer is insolvent.''
        (3) Subsection (d) of section 108 is amended--
            (A) by striking ``subsections (a), (b), and (g)'' in 
        paragraphs (6) and (7)(A) and inserting ``subsections (a), (b), 
        (c), and (g)'',
            (B) by striking ``Subsections (a), (b), and (g)'' in the 
        subsection heading and inserting ``Certain Provisions'', and
            (C) by striking ``Subsections (a), (b), and (g)'' in the 
        headings of paragraphs (6) and (7)(A) and inserting ``Certain 
        provisions''.
        (4) Subparagraph (B) of section 108(d)(7) is amended by adding 
    at the end thereof the following new sentence: ``The preceding 
    sentence shall not apply to any discharge to the extent that 
    subsection (a)(1)(D) applies to such discharge.''
        (5) Subparagraph (A) of section 108(d)(9) is amended by 
    inserting ``or under paragraph (3)(B) of subsection (c)'' after 
    ``subsection (b)''.
        (6) Paragraph (2) of section 1017(a) is amended by striking ``or 
    (b)(5)'' and inserting ``, (b)(5), or (c)(1)''.
        (7) Subparagraph (A) of section 1017(b)(3) is amended by 
    inserting ``or (c)(1)'' after ``subsection (b)(5)''.
        (8) Section 1017(b)(3) is amended by adding at the end the 
    following new subparagraph:
            ``(F) Special rules for qualified real property business 
        indebtedness.--In the case of any amount which under section 
        108(c)(1) is to be applied to reduce basis--
                ``(i) depreciable property shall only include 
            depreciable real property for purposes of subparagraphs (A) 
            and (C),
                ``(ii) subparagraph (E) shall not apply, and
                ``(iii) in the case of property taken into account under 
            section 108(c)(2)(B), the reduction with respect to such 
            property shall be made as of the time immediately before 
            disposition if earlier than the time under subsection (a).''
        (9) Paragraph (1) of section 703(b) is amended by striking 
    ``subsection (b)(5)'' and inserting ``subsection (b)(5) or (c)(3)''.
    (d) Effective Date.--The amendments made by this section shall apply 
to discharges after December 31, 1992, in taxable years ending after 
such date.

 Subpart E--Increase in Recovery Period for Nonresidential Real Property

SEC. 13151. INCREASE IN RECOVERY PERIOD FOR NONRESIDENTIAL REAL 
PROPERTY.
    (a) General Rule.--Paragraph (1) of section 168(c) (relating to 
applicable recovery period) is amended by striking the item relating to 
nonresidential real property and inserting the following:

    ``Nonresidential real property............................
                                                            39 years.''.

    (b) Effective Date.--
        (1) In general.--Except as provided in paragraph (2), the 
    amendment made by subsection (a) shall apply to property placed in 
    service by the taxpayer on or after May 13, 1993.
        (2) Exception.--The amendments made by this section shall not 
    apply to property placed in service by the taxpayer before January 
    1, 1994, if--
            (A) the taxpayer or a qualified person entered into a 
        binding written contract to purchase or construct such property 
        before May 13, 1993, or
            (B) the construction of such property was commenced by or 
        for the taxpayer or a qualified person before May  13, 1993.
    For purposes of this paragraph, the term ``qualified person'' means 
    any person who transfers his rights in such a contract or such 
    property to the taxpayer but only if the property is not placed in 
    service by such person before such rights are transferred to the 
    taxpayer.

                           PART V--LUXURY TAX

SEC. 13161. REPEAL OF LUXURY EXCISE TAXES OTHER THAN ON PASSENGER 
VEHICLES.
    (a) In General.--Subchapter A of chapter 31 (relating to retail 
excise taxes) is amended to read as follows:

              ``Subchapter A--Luxury Passenger Automobiles

        ``Sec. 4001. Imposition of tax.
        ``Sec. 4002. 1st retail sale; uses, etc. treated as sales; 
                  determination of price.
        ``Sec. 4003. Special rules.

``SEC. 4001. IMPOSITION OF TAX.

    ``(a) Imposition of Tax.--There is hereby imposed on the 1st retail 
sale of any passenger vehicle a tax equal to 10 percent of the price for 
which so sold to the extent such price exceeds $30,000.
    ``(b) Passenger Vehicle.--
        ``(1) In general.--For purposes of this subchapter, the term 
    `passenger vehicle' means any 4-wheeled vehicle--
            ``(A) which is manufactured primarily for use on public 
        streets, roads, and highways, and
            ``(B) which is rated at 6,000 pounds unloaded gross vehicle 
        weight or less.
        ``(2) Special rules.--
            ``(A) Trucks and vans.--In the case of a truck or van, 
        paragraph (1)(B) shall be applied by substituting `gross vehicle 
        weight' for `unloaded gross vehicle weight'.
            ``(B) Limousines.--In the case of a limousine, paragraph (1) 
        shall be applied without regard to subparagraph (B) thereof.
    ``(c) Exceptions for Taxicabs, Etc.--The tax imposed by this section 
shall not apply to the sale of any passenger vehicle for use by the 
purchaser exclusively in the active conduct of a trade or business of 
transporting persons or property for compensation or hire.
    ``(d) Exemption for Law Enforcement Uses, Etc.--No tax shall be 
imposed by this section on the sale of any passenger vehicle--
        ``(1) to the Federal Government, or a State or local government, 
    for use exclusively in police, firefighting, search and rescue, or 
    other law enforcement or public safety activities, or in public 
    works activities, or
        ``(2) to any person for use exclusively in providing emergency 
    medical services.
    ``(e) Inflation Adjustment.--
        ``(1) In general.--If, for any calendar year, the excess (if 
    any) of--
            ``(A) $30,000, increased by the cost-of-living adjustment 
        for the calendar year, over
            ``(B) the dollar amount in effect under subsection (a) for 
        the calendar year,
    is equal to or greater than $2,000, then the $30,000 amount in 
    subsection (a) and section 4003(a) (as previously adjusted under 
    this subsection) for any subsequent calendar year shall be increased 
    by the amount of such excess rounded to the next lowest multiple of 
    $2,000.
        ``(2) Cost-of-living adjustment.--For purposes of paragraph (1), 
    the cost-of-living adjustment for any calendar year shall be the 
    cost-of-living adjustment under section 1(f)(3) for such calendar 
    year, determined by substituting `calendar year 1990' for `calendar 
    year 1992' in subparagraph (B) thereof.
    ``(f) Termination.--The tax imposed by this section shall not apply 
to any sale or use after December 31, 1999.
``SEC. 4002. 1ST RETAIL SALE; USES, ETC. TREATED AS SALES; DETERMINATION 
OF PRICE.
    ``(a) 1st Retail Sale.--For purposes of this subchapter, the term 
`1st retail sale' means the 1st sale, for a purpose other than resale, 
after manufacture, production, or importation.
    ``(b) Use Treated as Sale.--
        ``(1) In general.--If any person uses a passenger vehicle 
    (including any use after importation) before the 1st retail sale of 
    such vehicle, then such person shall be liable for tax under this 
    subchapter in the same manner as if such vehicle were sold at retail 
    by him.
        ``(2) Exemption for further manufacture.--Paragraph (1) shall 
    not apply to use of a vehicle as material in the manufacture or 
    production of, or as a component part of, another vehicle taxable 
    under this subchapter to be manufactured or produced by him.
        ``(3) Exemption for demonstration use.--Paragraph (1) shall not 
    apply to any use of a passenger vehicle as a demonstrator.
        ``(4) Exception for use after importation of certain vehicles.--
    Paragraph (1) shall not apply to the use of a vehicle after 
    importation if the user or importer establishes to the satisfaction 
    of the Secretary that the 1st use of the vehicle occurred before 
    January 1, 1991, outside the United States.
        ``(5) Computation of tax.--In the case of any person made liable 
    for tax by paragraph (1), the tax shall be computed on the price at 
    which similar vehicles are sold at retail in the ordinary course of 
    trade, as determined by the Secretary.
    ``(c) Leases Considered as Sales.--For purposes of this subchapter--
        ``(1) In general.--Except as otherwise provided in this 
    subsection, the lease of a vehicle (including any renewal or any 
    extension of a lease or any subsequent lease of such vehicle) by any 
    person shall be considered a sale of such vehicle at retail.
        ``(2) Special rules for long-term leases.--
            ``(A) Tax not imposed on sale for leasing in a qualified 
        lease.--The sale of a passenger vehicle to a person engaged in a 
        passenger vehicle leasing or rental trade or business for 
        leasing by such person in a long-term lease shall not be treated 
        as the 1st retail sale of such vehicle.
            ``(B) Long-term lease.--For purposes of subparagraph (A), 
        the term `long-term lease' means any long-term lease (as defined 
        in section 4052).
            ``(C) Special rules.--In the case of a long-term lease of a 
        vehicle which is treated as the 1st retail sale of such 
        vehicle--
                ``(i) Determination of price.--The tax under this 
            subchapter shall be computed on the lowest price for which 
            the vehicle is sold by retailers in the ordinary course of 
            trade.
                ``(ii) Payment of tax.--Rules similar to the rules of 
            section 4217(e)(2) shall apply.
                ``(iii) No tax where exempt use by lessee.--No tax shall 
            be imposed on any lease payment under a long-term lease if 
            the lessee's use of the vehicle under such lease is an 
            exempt use (as defined in section 4003(b)) of such vehicle.
    ``(d) Determination of Price.--
        ``(1) In general.--In determining price for purposes of this 
    subchapter--
            ``(A) there shall be included any charge incident to placing 
        the passenger vehicle in condition ready for use,
            ``(B) there shall be excluded--
                ``(i) the amount of the tax imposed by this subchapter,
                ``(ii) if stated as a separate charge, the amount of any 
            retail sales tax imposed by any State or political 
            subdivision thereof or the District of Columbia, whether the 
            liability for such tax is imposed on the vendor or vendee, 
            and
                ``(iii) the value of any component of such passenger 
            vehicle if--

                    ``(I) such component is furnished by the 1st user of 
                such passenger vehicle, and
                    ``(II) such component has been used before such 
                furnishing, and

            ``(C) the price shall be determined without regard to any 
        trade-in.
        ``(2) Other rules.--Rules similar to the rules of paragraphs (2) 
    and (4) of section 4052(b) shall apply for purposes of this 
    subchapter.

``SEC. 4003. SPECIAL RULES.

    ``(a) Separate Purchase of Vehicle and Parts and Accessories 
Therefor.--Under regulations prescribed by the Secretary--
        ``(1) In general.--Except as provided in paragraph (2), if--
            ``(A) the owner, lessee, or operator of any passenger 
        vehicle installs (or causes to be installed) any part or 
        accessory on such vehicle, and
            ``(B) such installation is not later than the date 6 months 
        after the date the vehicle was 1st placed in service,
    then there is hereby imposed on such installation a tax equal to 10 
    percent of the price of such part or accessory and its installation.
        ``(2) Limitation.--The tax imposed by paragraph (1) on the 
    installation of any part or accessory shall not exceed 10 percent of 
    the excess (if any) of--
            ``(A) the sum of--
                ``(i) the price of such part or accessory and its 
            installation,
                ``(ii) the aggregate price of the parts and accessories 
            (and their installation) installed before such part or 
            accessory, plus
                ``(iii) the price for which the passenger vehicle was 
            sold, over
            ``(B) $30,000.
        ``(3) Exceptions.--Paragraph (1) shall not apply if--
            ``(A) the part or accessory installed is a replacement part 
        or accessory,
            ``(B) the part or accessory is installed to enable or assist 
        an individual with a disability to operate the vehicle, or to 
        enter or exit the vehicle, by compensating for the effect of 
        such disability, or
            ``(C) the aggregate price of the parts and accessories (and 
        their installation) described in paragraph (1) with respect to 
        the vehicle does not exceed $200 (or such other amount or 
        amounts as the Secretary may by regulation prescribe).
    The price of any part or accessory (and its installation) to which 
    paragraph (1) does not apply by reason of this paragraph shall not 
    be taken into account under paragraph (2)(A).
        ``(4) Installers secondarily liable for tax.--The owners of the 
    trade or business installing the parts or accessories shall be 
    secondarily liable for the tax imposed by this subsection.
    ``(b) Imposition of Tax on Sales, Etc., Within 2 Years of Vehicles 
Purchased Tax-Free.--
        ``(1) In general.--If--
            ``(A) no tax was imposed under this subchapter on the 1st 
        retail sale of any passenger vehicle by reason of its exempt 
        use, and
            ``(B) within 2 years after the date of such 1st retail sale, 
        such vehicle is resold by the purchaser or such purchaser makes 
        a substantial nonexempt use of such vehicle,
    then such sale or use of such vehicle by such purchaser shall be 
    treated as the 1st retail sale of such vehicle for a price equal to 
    its fair market value at the time of such sale or use.
        ``(2) Exempt use.--For purposes of this subsection, the term 
    `exempt use' means any use of a vehicle if the 1st retail sale of 
    such vehicle is not taxable under this subchapter by reason of such 
    use.
    ``(c) Parts and Accessories Sold With Taxable Passenger Vehicle.--
Parts and accessories sold on, in connection with, or with the sale of 
any passenger vehicle shall be treated as part of the vehicle.
    ``(d) Partial Payments, Etc.--In the case of a contract, sale, or 
arrangement described in paragraph (2), (3), or (4) of section 4216(c), 
rules similar to the rules of section 4217(e)(2) shall apply for 
purposes of this subchapter.''
    (b) Technical Amendments.--
        (1) Subsection (c) of section 4221 is amended by striking 
    ``4002(b), 4003(c), 4004(a)'' and inserting ``4001(d)''.
        (2) Subsection (d) of section 4222 is amended by striking 
    ``4002(b), 4003(c), 4004(a)'' and inserting ``4001(d)''.
        (3) The table of subchapters for chapter 31 is amended by 
    striking the item relating to subchapter A and inserting the 
    following:
        ``Subchapter A. Luxury passenger vehicles.''

    (c) Effective Date.--The amendments made by this section shall take 
effect on January 1, 1993, except that the provisions of section 4001(e) 
of the Internal Revenue Code of 1986 (as amended by subsection (a)) 
shall take effect on the date of the enactment of this Act.
SEC. 13162. EXEMPTION FROM LUXURY EXCISE TAX FOR CERTAIN EQUIPMENT 
INSTALLED ON PASSENGER VEHICLES FOR USE BY DISABLED INDIVIDUALS.
    (a) In General.--Paragraph (3) of section 4004(b) (relating to 
separate purchase of article and parts and accessories therefor), as in 
effect on the day before the date of the enactment of this Act, is 
amended--
        (1) by striking ``or'' at the end of subparagraph (A),
        (2) by redesignating subparagraph (B) as subparagraph (C),
        (3) by inserting after subparagraph (A) the following new 
    subparagraph:
            ``(B) the part or accessory is installed on a passenger 
        vehicle to enable or assist an individual with a disability to 
        operate the vehicle, or to enter or exit the vehicle, by 
        compensating for the effect of such disability, or'', and
        (4) by inserting after subparagraph (C) the following flush 
    sentence:
    ``The price of any part or accessory (and its installation) to which 
    paragraph (1) does not apply by reason of this paragraph shall not 
    be taken into account under paragraph (2)(A).''
    (b) Effective Date.--The amendments made by this section shall take 
effect as if included in the amendments made by section 11221(a) of the 
Omnibus Budget Reconciliation Act of 1990.
    (c) Period for Filing Claims.--If refund or credit of any 
overpayment of tax resulting from the application of the amendments made 
by this section is prevented at any time before the close of the 1-year 
period beginning on the date of the enactment of this Act by the 
operation of any law or rule of law (including res judicata), refund or 
credit of such overpayment (to the extent attributable to such 
amendments) may, nevertheless, be made or allowed if claim therefor is 
filed before the close of such 1-year period.
SEC. 13163. TAX ON DIESEL FUEL USED IN NONCOMMERCIAL BOATS.
    (a) General Rule.--
        (1) Paragraph (2) of section 4092(a) (defining diesel fuel) is 
    amended by striking ``or a diesel-powered train'' and inserting ``, 
    a diesel-powered train, or a diesel-powered boat''.
        (2) Paragraph (1) of section 4041(a) is amended--
            (A) by striking ``diesel-powered highway vehicle'' each 
        place it appears and inserting ``diesel-powered highway vehicle 
        or diesel-powered boat'', and
            (B) by striking ``such vehicle'' and inserting ``such 
        vehicle or boat''.
        (3) Subparagraph (B) of section 4092(b)(1) is amended by 
    striking ``commercial and noncommercial vessels'' each place it 
    appears and inserting ``vessels for use in an off-highway business 
    use (as defined in section 6421(e)(2)(B))''.
    (b) Exemption for Use in Fisheries or Commercial Transportation.--
Subparagraph (B) of section 6421(e)(2) is amended to read as follows:
            ``(B) Uses in boats.--
                ``(i) In general.--Except as otherwise provided in this 
            subparagraph, the term `off-highway business use' does not 
            include any use in a motorboat.
                ``(ii) Fisheries and whaling.--The term `off-highway 
            business use' shall include any use in a vessel employed in 
            the fisheries or in the whaling business.
                ``(iii) Exception for diesel fuel.--The term `off-
            highway business use' shall include the use of diesel fuel 
            in a boat in the active conduct of--

                    ``(I) a trade or business of commercial fishing or 
                transporting persons or property for compensation or 
                hire, and
                    ``(II) except as provided in clause (iv), any other 
                trade or business.

                ``(iv) Noncommercial boats.--In the case of a boat used 
            predominantly in any activity which is of a type generally 
            considered to constitute entertainment, amusement, or 
            recreation, clause (iii)(II) shall not apply to--

                    ``(I) the taxes under sections 4041(a)(1) and 4081 
                for the period after December 31, 1993, and before 
                January 1, 2000, and
                    ``(II) so much of the tax under sections 4041(a)(1) 
                and 4081 as does not exceed 4.3 cents per gallon for the 
                period after December 31, 1999.''

    (c) Retention of Taxes in General Fund.--Subsection (b) of section 
9508 (relating to transfers to Leaking Underground Storage Tank Trust 
Fund) is amended by adding at the end thereof the following new 
sentence: ``For purposes of this subsection, there shall not be taken 
into account the taxes imposed by sections 4041 and 4081 on diesel fuel 
sold for use or used as fuel in a diesel-powered boat.''
    (d) Effective Date.--The amendments made by this section shall take 
effect on January 1, 1994.

                         PART VI--OTHER CHANGES

SEC. 13171. ALTERNATIVE MINIMUM TAX TREATMENT OF CONTRIBUTIONS OF 
APPRECIATED PROPERTY.
    (a) Repeal of Tax Preference.--Subsection (a) of section 57 (as 
amended by section 13113) is amended by striking paragraph (6) (relating 
to appreciated property charitable deduction) and by redesignating 
paragraphs (7) and (8) as paragraphs (6) and (7), respectively.
    (b) Effect on Adjusted Current Earnings.--Paragraph (4) of section 
56(g) is amended by adding at the end thereof the following new 
subparagraph:
            ``(J) Treatment of charitable contributions.--
        Notwithstanding subparagraphs (B) and (C), no adjustment related 
        to the earnings and profits effects of any charitable 
        contribution shall be made in computing adjusted current 
        earnings.''
    (c) Conforming Amendment.--Subclause (II) of section 53(d)(1)(B)(ii) 
(as amended by section 13113) is amended by striking ``(5), (6), and 
(8)'' and inserting ``(5), and (7)''.
    (d) Effective Date.--The amendments made by this section shall apply 
to contributions made after June 30, 1992, except that in the case of 
any contribution of capital gain property which is not tangible personal 
property, such amendments shall apply only if the contribution is made 
after December 31, 1992.
SEC. 13172. SUBSTANTIATION REQUIREMENT FOR DEDUCTION OF CERTAIN 
CHARITABLE CONTRIBUTIONS.
    (a) Substantiation Requirement.--Section 170(f) (providing special 
rules relating to the deduction of charitable contributions and gifts) 
is amended by adding at the end the following new paragraph:
        ``(8) Substantiation requirement for certain contributions.--
            ``(A) General rule.--No deduction shall be allowed under 
        subsection (a) for any contribution of $250 or more unless the 
        taxpayer substantiates the contribution by a contemporaneous 
        written acknowledgment of the contribution by the donee 
        organization that meets the requirements of subparagraph (B).
            ``(B) Content of acknowledgement.--An acknowledgement meets 
        the requirements of this subparagraph if it includes the 
        following information:
                ``(i) The amount of cash and a description (but not 
            value) of any property other than cash contributed.
                ``(ii) Whether the donee organization provided any goods 
            or services in consideration, in whole or in part, for any 
            property described in clause (i).
                ``(iii) A description and good faith estimate of the 
            value of any goods or services referred to in clause (ii) 
            or, if such goods or services consist solely of intangible 
            religious benefits, a statement to that effect.
        For purposes of this subparagraph, the term `intangible 
        religious benefit' means any intangible religious benefit which 
        is provided by an organization organized exclusively for 
        religious purposes and which generally is not sold in a 
        commercial transaction outside the donative context.
            ``(C) Contemporaneous.--For purposes of subparagraph (A), an 
        acknowledgment shall be considered to be contemporaneous if the 
        taxpayer obtains the acknowledgment on or before the earlier 
        of--
                ``(i) the date on which the taxpayer files a return for 
            the taxable year in which the contribution was made, or
                ``(ii) the due date (including extensions) for filing 
            such return.
            ``(D) Substantiation not required for contributions reported 
        by the donee organization.--Subparagraph (A) shall not apply to 
        a contribution if the donee organization files a return, on such 
        form and in accordance with such regulations as the Secretary 
        may prescribe, which includes the information described in 
        subparagraph (B) with respect to the contribution.
            ``(E) Regulations.--The Secretary shall prescribe such 
        regulations as may be necessary or appropriate to carry out the 
        purposes of this paragraph, including regulations that may 
        provide that some or all of the requirements of this paragraph 
        do not apply in appropriate cases.''
    (b) Effective Date.--The provisions of this section shall apply to 
contributions made on or after January 1, 1994.
SEC. 13173. DISCLOSURE RELATED TO QUID PRO QUO CONTRIBUTIONS.
    (a) Disclosure Requirement.--Subchapter B of chapter 61 (relating to 
information and returns) is amended by redesignating section 6115 as 
section 6116 and by inserting after section 6114 the following new 
section:
``SEC. 6115. DISCLOSURE RELATED TO QUID PRO QUO CONTRIBUTIONS.
    ``(a) Disclosure Requirement.--If an organization described in 
section 170(c) (other than paragraph (1) thereof) receives a quid pro 
quo contribution in excess of $75, the organization shall, in connection 
with the solicitation or receipt of the contribution, provide a written 
statement which--
        ``(1) informs the donor that the amount of the contribution that 
    is deductible for Federal income tax purposes is limited to the 
    excess of the amount of any money and the value of any property 
    other than money contributed by the donor over the value of the 
    goods or services provided by the organization, and
        ``(2) provides the donor with a good faith estimate of the value 
    of such goods or services.
    ``(b) Quid Pro Quo Contribution.--For purposes of this section, the 
term `quid pro quo contribution' means a payment made partly as a 
contribution and partly in consideration for goods or services provided 
to the payor by the donee organization. A quid pro quo contribution does 
not include any payment made to an organization, organized exclusively 
for religious purposes, in return for which the taxpayer receives solely 
an intangible religious benefit that generally is not sold in a 
commercial transaction outside the donative context.''
    (b) Penalty for Failure To Disclose.--Part I of subchapter B of 
chapter 68 (relating to assessable penalties) is amended by inserting 
after section 6713 the following new section:
``SEC. 6714. FAILURE TO MEET DISCLOSURE REQUIREMENTS APPLICABLE TO QUID 
PRO QUO CONTRIBUTIONS.
    ``(a) Imposition of Penalty.--If an organization fails to meet the 
disclosure requirement of section 6115 with respect to a quid pro quo 
contribution, such organization shall pay a penalty of $10 for each 
contribution in respect of which the organization fails to make the 
required disclosure, except that the total penalty imposed by this 
subsection with respect to a particular fundraising event or mailing 
shall not exceed $5,000.
    ``(b) Reasonable Cause Exception.--No penalty shall be imposed under 
this section with respect to any failure if it is shown that such 
failure is due to reasonable cause.''
    (c) Clerical Amendments.--
        (1) The table for subchapter B of chapter 61 is amended by 
    striking the item relating to section 6115 and inserting the 
    following new items:
        ``Sec. 6115. Disclosure related to quid pro quo contributions.
        ``Sec. 6116. Cross reference.''

        (2) The table for part I of subchapter B of chapter 68 is 
    amended by inserting after the item for section 6713 the following 
    new item:
        ``Sec. 6714. Failure to meet disclosure requirements applicable 
                  to quid pro quo contributions.''

    (d) Effective Date.--The provisions of this section shall apply to 
quid pro quo contributions made on or after January 1, 1994.
SEC. 13174. TEMPORARY EXTENSION OF DEDUCTION FOR HEALTH INSURANCE COSTS 
OF SELF-EMPLOYED INDIVIDUALS.
    (a) In General.--
        (1) Extension.--Paragraph (6) of section 162(l) (relating to 
    special rules for health insurance costs of self-employed 
    individuals) is amended by striking ``June 30, 1992'' and inserting 
    ``December 31, 1993''.
        (2) Conforming amendment.--Paragraph (2) of section 110(a) of 
    the Tax Extension Act of 1991 is hereby repealed.
        (3) Effective date.--The amendments made by this subsection 
    shall apply to taxable years ending after June 30, 1992.
    (b) Determination of Eligibility for Employer-Sponsored Health 
Plan.--
        (1) In general.--Paragraph (2)(B) of section 162(l) is amended 
    to read as follows:
            ``(B) Other coverage.--Paragraph (1) shall not apply to any 
        taxpayer for any calendar month for which the taxpayer is 
        eligible to participate in any subsidized health plan maintained 
        by any employer of the taxpayer or of the spouse of the 
        taxpayer.''
        (2) Effective date.--The amendment made by paragraph (1) shall 
    apply to taxable years beginning after December 31, 1992.

                     Subchapter B--Revenue Increases

                PART I--PROVISIONS AFFECTING INDIVIDUALS

                        Subpart A--Rate Increases

SEC. 13201. INCREASE IN TOP MARGINAL RATE UNDER SECTION 1.

    (a) General Rule.--Section 1 (relating to tax imposed) is amended by 
striking subsections (a) through (e) and inserting the following:
    ``(a) Married Individuals Filing Joint Returns and Surviving 
Spouses.--There is hereby imposed on the taxable income of--
        ``(1) every married individual (as defined in section 7703) who 
    makes a single return jointly with his spouse under section 6013, 
    and
        ``(2) every surviving spouse (as defined in section 2(a)),
a tax determined in accordance with the following table:
``If taxable income is:
The tax is:
  Not over $36,900
  15% of taxable income.
  Over $36,900 but not over $89,150
  $5,535, plus 28% of the excess over $36,900.
  Over $89,150 but not over $140,000
  $20,165, plus 31% of the excess over $89,150.
  Over $140,000
  $35,928.50, plus 36% of the excess over $140,000.

    ``(b) Heads of Households.--There is hereby imposed on the taxable 
income of every head of a household (as defined in section 2(b)) a tax 
determined in accordance with the following table:
``If taxable income is:
The tax is:
  Not over $29,600
  15% of taxable income.
  Over $29,600 but not over $76,400
  $4,440, plus 28% of the excess over $29,600.
  Over $76,400 but not over $127,500
  $17,544, plus 31% of the excess over $76,400.
  Over $127,500
  $33,385, plus 36% of the excess over $127,500.

    ``(c) Unmarried Individuals (Other Than Surviving Spouses and Heads 
of Households).--There is hereby imposed on the taxable income of every 
individual (other than a surviving spouse as defined in section 2(a) or 
the head of a household as defined in section 2(b)) who is not a married 
individual (as defined in section 7703) a tax determined in accordance 
with the following table:
``If taxable income is:
The tax is:
  Not over $22,100
  15% of taxable income.
  Over $22,100 but not over $53,500
  $3,315, plus 28% of the excess over $22,100.
  Over $53,500 but not over $115,000
  $12,107, plus 31% of the excess over $53,500.
  Over $115,000
  $31,172, plus 36% of the excess over $115,000.

    ``(d) Married Individuals Filing Separate Returns.--There is hereby 
imposed on the taxable income of every married individual (as defined in 
section 7703) who does not make a single return jointly with his spouse 
under section 6013, a tax determined in accordance with the following 
table:
``If taxable income is:
The tax is:
  Not over $18,450
  15% of taxable income.
  Over $18,450 but not over $44,575
  $2,767.50, plus 28% of the excess over $18,450.
  Over $44,575 but not over $70,000
  $10,082.50, plus 31% of the excess over $44,575.
  Over $70,000
  $17,964.25, plus 36% of the excess over $70,000.

    ``(e) Estates and Trusts.--There is hereby imposed on the taxable 
income of--
        ``(1) every estate, and
        ``(2) every trust,
taxable under this subsection a tax determined in accordance with the 
following table:
``If taxable income is:
The tax is:
  Not over $1,500
  15% of taxable income.
  Over $1,500 but not over $3,500
  $225, plus 28% of the excess over $1,500.
  Over $3,500 but not over $5,500
  $785, plus 31% of the excess over $3,500.
  Over $5,500
  $1,405, plus 36% of the excess over $5,500.''

    (b) Conforming Amendments.--
        (1) Section 531 is amended by striking ``28 percent'' and 
    inserting ``36 percent''.
        (2) Section 541 is amended by striking ``28 percent'' and 
    inserting ``36 percent''.
        (3)(A) Subsection (f) of section 1 is amended--
            (i) by striking ``1990'' in paragraph (1) and inserting 
        ``1993'', and
            (ii) by striking ``1989'' in paragraph (3)(B) and inserting 
        ``1992''.
        (B) Subsection (f) of section 1 is amended by adding at the end 
    thereof the following new paragraph:
        ``(7) Special rule for certain brackets.--
            ``(A) Calendar year 1994.--In prescribing the tables under 
        paragraph (1) which apply with respect to taxable years 
        beginning in calendar year 1994, the Secretary shall make no 
        adjustment to the dollar amounts at which the 36 percent rate 
        bracket begins or at which the 39.6 percent rate begins under 
        any table contained in subsection (a), (b), (c), (d), or (e).
            ``(B) Later calendar years.--In prescribing tables under 
        paragraph (1) which apply with respect to taxable years 
        beginning in a calendar year after 1994, the cost-of-living 
        adjustment used in making adjustments to the dollar amounts 
        referred to in subparagraph (A) shall be determined under 
        paragraph (3) by substituting `1993' for `1992'.''
        (C) Subparagraph (C) of section 41(e)(5) is amended by striking 
    ``1989'' each place it appears and inserting ``1992''.
        (D) Subparagraph (B) of section 63(c)(4) is amended by striking 
    ``1989'' and inserting ``1992''.
        (E) Subparagraph (B) of section 68(b)(2) is amended by striking 
    ``1989'' and inserting ``1992''.
        (F) Subparagraph (B) of section 132(f)(6) is amended by striking 
    ``, determined by substituting'' and all that follows down through 
    the period at the end thereof and inserting a period.
        (G) Subparagraphs (A)(ii) and (B)(ii) of section 151(d)(4) are 
    each amended by striking ``1989'' and inserting ``1992''.
        (H) Clause (ii) of section 513(h)(2)(C) is amended by striking 
    ``1989'' and inserting ``1992''.
        (4) Paragraph (3) of section 453A(c) is amended by adding at the 
    end thereof the following new sentence:
    ``For purposes of applying the preceding sentence with respect to so 
    much of the gain which, when recognized, will be treated as long-
    term capital gain, the maximum rate on net capital gain under 
    section 1(h) or 1201 (whichever is appropriate) shall be taken into 
    account.''
    (c) Effective Date.--The amendments made by this section shall apply 
to taxable years beginning after December 31, 1992.
    (d) Election to Pay Additional 1993 Taxes in Installments.--
        (1) In general.--At the election of the taxpayer, the additional 
    1993 taxes may be paid in 3 equal installments.
        (2) Dates for paying installments.--In the case of any tax 
    payable in installments by reason of paragraph (1)--
            (A) the first installment shall be paid on or before the due 
        date for the taxpayer's taxable year beginning in calendar year 
        1993,
            (B) the second installment shall be paid on or before the 
        date 1 year after the date determined under subparagraph (A), 
        and
            (C) the third installment shall be paid on or before the 
        date 2 years after the date determined under subparagraph (A).
    For purposes of the preceding sentence, the term ``due date'' means 
    the date prescribed for filing the taxpayer's return determined 
    without regard to extensions.
        (3) Extension without interest.--For purposes of section 6601 of 
    the Internal Revenue Code of 1986, the date prescribed for the 
    payment of any tax payable in installments under paragraph (1) shall 
    be determined with regard to the extension under paragraph (1).
        (4) Additional 1993 taxes.--
            (A) In general.--For purposes of this subsection, the term 
        ``additional 1993 taxes'' means the excess of--
                (i) the taxpayer's net chapter 1 liability as shown on 
            the taxpayer's return for the taxpayer's taxable year 
            beginning in calendar year 1993, over
                (ii) the amount which would have been the taxpayer's net 
            chapter 1 liability for such taxable year if such liability 
            had been determined using the rates which would have been in 
            effect under section 1 of the Internal Revenue Code of 1986 
            for taxable years beginning in calendar year 1993 but for 
            the amendments made by this section and section 13202 and 
            such liability had otherwise been determined on the basis of 
            the amounts shown on the taxpayer's return.
            (B) Net chapter 1 liability.--For purposes of subparagraph 
        (A), the term ``net chapter 1 liability'' means the liability 
        for tax under chapter 1 of the Internal Revenue Code of 1986 
        determined--
                (i) after the application of any credit against such tax 
            other than the credits under sections 31 and 34, and
                (ii) before crediting any payment of estimated tax for 
            the taxable year.
        (5) Acceleration of payments.--If the taxpayer does not pay any 
    installment under this section on or before the date prescribed for 
    its payment or if the Secretary of the Treasury or his delegate 
    believes that the collection of any amount payable in installments 
    under this section is in jeopardy, the Secretary shall immediately 
    terminate the extension under paragraph (1) and the whole of the 
    unpaid tax shall be paid on notice and demand from the Secretary.
        (6) Election on return.--An election under paragraph (1) shall 
    be made on the taxpayer's return for the taxpayer's taxable year 
    beginning in calendar year 1993.
        (7) Exception for estates and trusts.--This subsection shall not 
    apply in the case of an estate or trust.

SEC. 13202. SURTAX ON HIGH-INCOME TAXPAYERS.

    (a) General Rule.--
        (1) Subsection (a) of section 1 (as amended by section 13201) is 
    amended by striking the last item in the table contained therein and 
    inserting the following:

  ``Over $140,000 but not over $250,000
  $35,928.50, plus 36% of the excess over $140,000.
  Over $250,000
  $75,528.50, plus 39.6% of the excess over $250,000.''

        (2) Subsection (b) of section 1 (as so amended) is amended by 
    striking the last item in the table contained therein and inserting 
    the following:

  ``Over $127,500 but not over $250,000
  $33,385, plus 36% of the excess over $127,500.
  Over $250,000
  $77,485, plus 39.6% of the excess over $250,000.''

        (3) Subsection (c) of section 1 (as so amended) is amended by 
    striking the last item in the table contained therein and inserting 
    the following:

  ``Over $115,000 but not over $250,000
  $31,172, plus 36% of the excess over $115,000.
  Over $250,000
  $79,772, plus 39.6% of the excess over $250,000.''

        (4) Subsection (d) of section 1 (as so amended) is amended by 
    striking the last item in the table contained therein and inserting 
    the following:

  ``Over $70,000 but not over $125,000
  $17,964.25, plus 36% of the excess over $70,000.
  Over $125,000
  $37,764.25, plus 39.6% of the excess over $125,000.''

        (5) Subsection (e) of section 1 (as so amended) is amended by 
    striking the last item in the table contained therein and inserting 
    the following:

  ``Over $5,500 but not over $7,500
  $1,405, plus 36% of the excess over $5,500.
  Over $7,500
  $2,125, plus 39.6% of the excess over $7,500.''

    (b) Technical Amendment.--Sections 531 and 541 (as amended by 
section 13201) are each amended by striking ``36 percent'' and inserting 
``39.6 percent''.
    (c) Effective Date.--The amendments made by this section shall apply 
to taxable years beginning after December 31, 1992.
SEC. 13203. MODIFICATIONS TO ALTERNATIVE MINIMUM TAX RATES AND EXEMPTION 
AMOUNTS.
    (a) Increase in Rate.--Paragraph (1) of section 55(b) (defining 
tentative minimum tax) is amended to read as follows:
        ``(1) Amount of tentative tax.--
            ``(A) Noncorporate taxpayers.--
                ``(i) In general.--In the case of a taxpayer other than 
            a corporation, the tentative minimum tax for the taxable 
            year is the sum of--

                    ``(I) 26 percent of so much of the taxable excess as 
                does not exceed $175,000, plus
                    ``(II) 28 percent of so much of the taxable excess 
                as exceeds $175,000.

            The amount determined under the preceding sentence shall be 
            reduced by the alternative minimum tax foreign tax credit 
            for the taxable year.
                ``(ii) Taxable excess.--For purposes of clause (i), the 
            term `taxable excess' means so much of the alternative 
            minimum taxable income for the taxable year as exceeds the 
            exemption amount.
                ``(iii) Married individual filing separate return.--In 
            the case of a married individual filing a separate return, 
            clause (i) shall be applied by substituting `$87,500' for 
            `$175,000' each place it appears. For purposes of the 
            preceding sentence, marital status shall be determined under 
            section 7703.
            ``(B) Corporations.--In the case of a corporation, the 
        tentative minimum tax for the taxable year is--
                ``(i) 20 percent of so much of the alternative minimum 
            taxable income for the taxable year as exceeds the exemption 
            amount, reduced by
                ``(ii) the alternative minimum tax foreign tax credit 
            for the taxable year.''
    (b) Increase in Exemption Amounts.--Paragraph (1) of section 55(d) 
(defining exemption amount) is amended--
        (1) by striking ``$40,000'' in subparagraph (A) and inserting 
    ``$45,000'',
        (2) by striking ``$30,000'' in subparagraph (B) and inserting 
    ``$33,750'', and
        (3) by striking ``$20,000'' in subparagraph (C) and inserting 
    ``$22,500''.
    (c) Conforming Amendments.--
        (1) The last sentence of section 55(d)(3) is amended by striking 
    ``$155,000 or (ii) $20,000'' and inserting ``$165,000 or (ii) 
    $22,500''.
        (2)(A) Subparagraph (A) of section 897(a)(2) is amended by 
    striking ``the amount determined under section 55(b)(1)(A) shall not 
    be less than 21 percent of'' and inserting ``the taxable excess for 
    purposes of section 55(b)(1)(A) shall not be less than''.
        (B) The heading for paragraph (2) of section 897(a) is amended 
    by striking ``21-percent''.
    (d) Effective Date.--The amendments made by this section shall apply 
to taxable years beginning after December 31, 1992.
SEC. 13204. OVERALL LIMITATION ON ITEMIZED DEDUCTIONS FOR HIGH-INCOME 
TAXPAYERS MADE PERMANENT.
    Subsection (f) of section 68 (relating to overall limitation on 
itemized deductions) is hereby repealed.
SEC. 13205. PHASEOUT OF PERSONAL EXEMPTION OF HIGH-INCOME TAXPAYERS MADE 
PERMANENT.
    Section 151(d)(3) (relating to phaseout of personal exemption) is 
amended by striking subparagraph (E).
SEC. 13206. PROVISIONS TO PREVENT CONVERSION OF ORDINARY INCOME TO 
CAPITAL GAIN.
    (a) Interest Embedded in Financial Transactions.--
        (1) In general.--Part IV of subchapter P of chapter 1 (relating 
    to special rules for determining capital gains and losses) is 
    amended by adding at the end the following new section:
``SEC. 1258. RECHARACTERIZATION OF GAIN FROM CERTAIN FINANCIAL 
TRANSACTIONS.
    ``(a) General Rule.--In the case of any gain--
        ``(1) which (but for this section) would be treated as gain from 
    the sale or exchange of a capital asset, and
        ``(2) which is recognized on the disposition or other 
    termination of any position which was held as part of a conversion 
    transaction,
such gain (to the extent such gain does not exceed the applicable 
imputed income amount) shall be treated as ordinary income.
    ``(b) Applicable Imputed Income Amount.--For purposes of subsection 
(a), the term `applicable imputed income amount' means, with respect to 
any disposition or other termination referred to in subsection (a), an 
amount equal to--
        ``(1) the amount of interest which would have accrued on the 
    taxpayer's net investment in the conversion transaction for the 
    period ending on the date of such disposition or other termination 
    (or, if earlier, the date on which the requirements of subsection 
    (c) ceased to be satisfied) at a rate equal to 120 percent of the 
    applicable rate, reduced by
        ``(2) the amount treated as ordinary income under subsection (a) 
    with respect to any prior disposition or other termination of a 
    position which was held as a part of such transaction.
The Secretary shall by regulations provide for such reductions in the 
applicable imputed income amount as may be appropriate by reason of 
amounts capitalized under section 263(g), ordinary income received, or 
otherwise.
    ``(c) Conversion Transaction.--For purposes of this section, the 
term `conversion transaction' means any transaction--
        ``(1) substantially all of the taxpayer's expected return from 
    which is attributable to the time value of the taxpayer's net 
    investment in such transaction, and
        ``(2) which is--
            ``(A) the holding of any property (whether or not actively 
        traded), and the entering into a contract to sell such property 
        (or substantially identical property) at a price determined in 
        accordance with such contract, but only if such property was 
        acquired and such contract was entered into on a substantially 
        contemporaneous basis,
            ``(B) an applicable straddle,
            ``(C) any other transaction which is marketed or sold as 
        producing capital gains from a transaction described in 
        paragraph (1), or
            ``(D) any other transaction specified in regulations 
        prescribed by the Secretary.
    ``(d) Definitions and Special Rules.--For purposes of this section--
        ``(1) Applicable straddle.--The term `applicable straddle' means 
    any straddle (within the meaning of section 1092(c)); except that 
    the term `personal property' shall include stock.
        ``(2) Applicable rate.--The term `applicable rate' means--
            ``(A) the applicable Federal rate determined under section 
        1274(d) (compounded semiannually) as if the conversion 
        transaction were a debt instrument, or
            ``(B) if the term of the conversion transaction is 
        indefinite, the Federal short-term rates in effect under section 
        6621(b) during the period of the conversion transaction 
        (compounded daily).
        ``(3) Treatment of built-in losses.--
            ``(A) In general.--If any position with a built-in loss 
        becomes part of a conversion transaction--
                ``(i) for purposes of applying this subtitle to such 
            position for periods after such position becomes part of 
            such transaction, such position shall be taken into account 
            at its fair market value as of the time it became part of 
            such transaction, except that
                ``(ii) upon the disposition or other termination of such 
            position in a transaction in which gain or loss is 
            recognized, such built-in loss shall be recognized and shall 
            have a character determined without regard to this section.
            ``(B) Built-in loss.--For purposes of subparagraph (A), the 
        term `built-in loss' means the loss (if any) which would have 
        been realized if the position had been disposed of or otherwise 
        terminated at its fair market value as of the time such position 
        became part of the conversion transaction.
        ``(4) Position taken into account at fair market value.--In 
    determining the taxpayer's net investment in any conversion 
    transaction, there shall be included the fair market value of any 
    position which becomes part of such transaction (determined as of 
    the time such position became part of such transaction).
        ``(5) Special rule for options dealers and commodities 
    traders.--
            ``(A) In general.--Subsection (a) shall not apply to 
        transactions --
                ``(i) of an options dealer in the normal course of the 
            dealer's trade or business of dealing in options, or
                ``(ii) of a commodities trader in the normal course of 
            the trader's trade or business of trading section 1256 
            contracts.
            ``(B) Definitions.--For purposes of this paragraph--
                ``(i) Options dealer.--The term `options dealer' has the 
            meaning given such term by section 1256(g)(8).
                ``(ii) Commodities trader.-- The term `commodities 
            trader' means any person who is a member (or, except as 
            otherwise provided in regulations, is entitled to trade as a 
            member) of a domestic board of trade which is designated as 
            a contract market by the Commodity Futures Trading 
            Commission.
            ``(C) Limited partners and limited entrepreneurs.--In the 
        case of any gain from a transaction recognized by an entity 
        which is allocable to a limited partner or limited entrepreneur 
        (within the meaning of section 464(e)(2)), subparagraph (A) 
        shall not apply if--
                ``(i) substantially all of the limited partner's (or 
            limited entrepreneur's) expected return from the entity is 
            attributable to the time value of the partner's (or 
            entrepreneur's) net investment in such entity,
                ``(ii) the transaction (or the interest in the entity) 
            was marketed or sold as producing capital gains treatment 
            from a transaction described in subsection (c)(1), or
                ``(iii) the transaction (or the interest in the entity) 
            is a transaction (or interest) specified in regulations 
            prescribed by the Secretary.''
        (2) Clerical amendment.--The table of sections for part IV of 
    subchapter P of chapter 1 is amended by adding at the end thereof 
    the following new item:
        ``Sec. 1258. Recharacterization of gain from certain financial 
                  transactions.''

        (3) Effective date.--The amendments made by this section shall 
    apply to conversion transactions entered into after April 30, 1993.
    (b) Repeal of Certain Exceptions to Market Discount Rules.--
        (1) Market discount bonds issued on or before july 18, 1984.--
    The following provisions are hereby repealed:
            (A) Section 1276(e).
            (B) Section 1277(d).
        (2) Tax-exempt obligations.--
            (A) In general.--Paragraph (1) of section 1278(a) (defining 
        market discount bond) is amended--
                (i) by striking clause (ii) of subparagraph (B) and 
            redesignating clauses (iii) and (iv) of such subparagraph as 
            clauses (ii) and (iii), respectively,
                (ii) by redesignating subparagraph (C) as subparagraph 
            (D), and
                (iii) by inserting after subparagraph (B) the following 
            new subparagraph:
            ``(C) Section 1277 not applicable to tax-exempt 
        obligations.--For purposes of section 1277, the term `market 
        discount bond' shall not include any tax-exempt obligation (as 
        defined in section 1275(a)(3)).''
            (B) Conforming amendments.--
                (i) Sections 1276(a)(4) and 1278(b)(1) are each amended 
            by striking ``sections 871(a)'' and inserting ``sections 
            103, 871(a),''.
                (ii) Subparagraph (B) of section 1278(a)(4) is amended 
            by inserting before the period at the end thereof the 
            following: ``or, in the case of a tax-exempt obligation, the 
            aggregate amount of the original issue discount which 
            accrued in the manner provided by section 1272(a) 
            (determined without regard to paragraph (7) thereof) during 
            periods before the acquisition of the bond by the 
            taxpayer''.
        (3) Effective date.--The amendments made by this section shall 
    apply to obligations purchased (within the meaning of section 
    1272(d)(1) of the Internal Revenue Code of 1986) after April 30, 
    1993.
    (c) Treatment of Stripped Preferred Stock.--
        (1) In general.--Section 305 is amended by redesignating 
    subsection (e) as subsection (f) and by inserting after subsection 
    (d) the following new subsection:
    ``(e) Treatment of Purchaser of Stripped Preferred Stock.--
        ``(1) In general.--If any person purchases after April 30, 1993, 
    any stripped preferred stock, then such person, while holding such 
    stock, shall include in gross income amounts equal to the amounts 
    which would have been so includible if such stripped preferred stock 
    were a bond issued on the purchase date and having original issue 
    discount equal to the excess, if any, of--
            ``(A) the redemption price for such stock, over
            ``(B) the price at which such person purchased such stock.
    The preceding sentence shall also apply in the case of any person 
    whose basis in such stock is determined by reference to the basis in 
    the hands of such purchaser.
        ``(2) Basis adjustments.--Appropriate adjustments to basis shall 
    be made for amounts includible in gross income under paragraph (1).
        ``(3) Tax treatment of person stripping stock.--If any person 
    strips the rights to 1 or more dividends from any stock described in 
    paragraph (5)(B) and after April 30, 1993, disposes of such dividend 
    rights, for purposes of paragraph (1), such person shall be treated 
    as having purchased the stripped preferred stock on the date of such 
    disposition for a purchase price equal to such person's adjusted 
    basis in such stripped preferred stock.
        ``(4) Amounts treated as ordinary income.--Any amount included 
    in gross income under paragraph (1) shall be treated as ordinary 
    income.
        ``(5) Stripped preferred stock.--For purposes of this 
    subsection--
            ``(A) In general.--The term `stripped preferred stock' means 
        any stock described in subparagraph (B) if there has been a 
        separation in ownership between such stock and any dividend on 
        such stock which has not become payable.
            ``(B) Description of stock.--Stock is described in this 
        subsection if such stock--
                ``(i) is limited and preferred as to dividends and does 
            not participate in corporate growth to any significant 
            extent, and
                ``(ii) has a fixed redemption price.
        ``(6) Purchase.--For purposes of this subsection, the term 
    `purchase' means--
            ``(A) any acquisition of stock, where
            ``(B) the basis of such stock is not determined in whole or 
        in part by the reference to the adjusted basis of such stock in 
        the hands of the person from whom acquired.''
        (2) Coordination with section 167(e).--Paragraph (2) of section 
    167(e) is amended to read as follows:
        ``(2) Coordination with other provisions.--
            ``(A) Section 273.--This subsection shall not apply to any 
        term interest to which section 273 applies.
            ``(B) Section 305(e).--This subsection shall not apply to 
        the holder of the dividend rights which were separated from any 
        stripped preferred stock to which section 305(e)(1) applies.''
        (3) Effective date.--The amendments made by this subsection 
    shall take effect on April 30, 1993.
    (d) Treatment of Capital Gain Under Limitation on Investment 
Interest.--
        (1) In general.--Subparagraph (B) of section 163(d)(4) (defining 
    investment income) is amended to read as follows:
            ``(B) Investment income.--The term `investment income' means 
        the sum of--
                ``(i) gross income from property held for investment 
            (other than any gain taken into account under clause 
            (ii)(I)),
                ``(ii) the excess (if any) of--

                    ``(I) the net gain attributable to the disposition 
                of property held for investment, over
                    ``(II) the net capital gain determined by only 
                taking into account gains and losses from dispositions 
                of property held for investment, plus

                ``(iii) so much of the net capital gain referred to in 
            clause (ii)(II) (or, if lesser, the net gain referred to in 
            clause (ii)(I)) as the taxpayer elects to take into account 
            under this clause.''
        (2) Coordination with special capital gains rate.--Subsection 
    (h) of section 1 is amended by adding at the end the following new 
    sentence:
``For purposes of the preceding sentence, the net capital gain for any 
taxable year shall be reduced (but not below zero) by the amount which 
the taxpayer elects to take into account as investment income for the 
taxable year under section 163(d)(4)(B)(iii).''
        (3) Effective date.--The amendments made by this subsection 
    shall apply to taxable years beginning after December 31, 1992.
    (e) Treatment of Certain Appreciated Inventory.--
        (1) In general.--Paragraph (1) of section 751(d) is amended to 
    read as follows:
        ``(1) Substantial appreciation.--
            ``(A) In general.--Inventory items of the partnership shall 
        be considered to have appreciated substantially in value if 
        their fair market value exceeds 120 percent of the adjusted 
        basis to the partnership of such property.
            ``(B) Certain property excluded.--For purposes of 
        subparagraph (A), there shall be excluded any inventory property 
        if a principal purpose for acquiring such property was to avoid 
        the provisions of this section relating to inventory items.''
        (2) Effective date.--The amendment made by paragraph (1) shall 
    apply to sales, exchanges, and distributions after April 30, 1993.

                       Subpart B--Other Provisions

SEC. 13207. REPEAL OF LIMITATION ON AMOUNT OF WAGES SUBJECT TO HEALTH 
              INSURANCE EMPLOYMENT TAX.

    (a) Hospital Insurance Tax.--
        (1) Paragraph (1) of section 3121(a) (defining wages) is 
    amended--
            (A) by inserting ``in the case of the taxes imposed by 
        sections 3101(a) and 3111(a)'' after ``(1)'',
            (B) by striking ``applicable contribution base (as 
        determined under subsection (x))'' each place it appears and 
        inserting ``contribution and benefit base (as determined under 
        section 230 of the Social Security Act)'', and
            (C) by striking ``such applicable contribution base'' and 
        inserting ``such contribution and benefit base''.
        (2) Section 3121 is amended by striking subsection (x).
    (b) Self-Employment Tax.--
        (1) Subsection (b) of section 1402 is amended--
            (A) by striking ``that part of the net'' in paragraph (1) 
        and inserting ``in the case of the tax imposed by section 
        1401(a), that part of the net'',
            (B) by striking ``applicable contribution base (as 
        determined under subsection (k))'' in paragraph (1) and 
        inserting ``contribution and benefit base (as determined under 
        section 230 of the Social Security Act)'',
            (C) by inserting ``and'' after ``section 3121(b),'', and
            (D) by striking ``and (C) includes'' and all that follows 
        through ``3111(b)''.
        (2) Section 1402 is amended by striking subsection (k).
    (c) Railroad Retirement Tax.--
        (1) Subparagraph (A) of section 3231(e)(2) is amended by adding 
    at the end thereof the following new clause:
                ``(iii) Hospital insurance taxes.--Clause (i) shall not 
            apply to--

                    ``(I) so much of the rate applicable under section 
                3201(a) or 3221(a) as does not exceed the rate of tax in 
                effect under section 3101(b), and
                    ``(II) so much of the rate applicable under section 
                3211(a)(1) as does not exceed the rate of tax in effect 
                under section 1401(b).''

        (2) Clause (i) of section 3231(e)(2)(B) is amended to read as 
    follows:
                ``(i) Tier 1 taxes.--Except as provided in clause (ii), 
            the term `applicable base' means for any calendar year the 
            contribution and benefit base determined under section 230 
            of the Social Security Act for such calendar year.''
    (d) Technical Amendments.--
        (1) Paragraph (1) of section 6413(c) is amended by striking 
    ``section 3101 or section 3201'' and inserting ``section 3101(a) or 
    section 3201(a) (to the extent of so much of the rate applicable 
    under section 3201(a) as does not exceed the rate of tax in effect 
    under section 3101(a))''.
        (2) Subparagraphs (B) and (C) of section 6413(c)(2) are each 
    amended by striking ``section 3101'' each place it appears and 
    inserting ``section 3101(a)''.
        (3) Subsection (c) of section 6413 is amended by striking 
    paragraph (3).
        (4) Sections 3122 and 3125 are each amended by striking 
    ``applicable contribution base limitation'' and inserting 
    ``contribution and benefit base limitation''.
    (e) Effective Date.--The amendments made by this section shall apply 
to 1994 and later calendar years.

SEC. 13208. TOP ESTATE AND GIFT TAX RATES MADE PERMANENT.

    (a) General Rule.--The table contained in paragraph (1) of section 
2001(c) is amended by striking the last item and inserting the following 
new items:

  ``Over $2,500,000 but not over $3,000,000
  $1,025,800, plus 53% of the excess over $2,500,000.
  Over $3,000,000
  $1,290,800, plus 55% of the excess over $3,000,000.''

    (b) Conforming Amendments.--
        (1) Subsection (c) of section 2001 is amended by striking 
    paragraph (2) and by redesignating paragraph (3) as paragraph (2).
        (2) Paragraph (2) of section 2001(c), as redesignated by 
    paragraph (1), is amended by striking ``($18,340,000 in the case of 
    decedents dying, and gifts made, after 1992)''.
        (3) The last sentence of section 2101(b) is amended by striking 
    ``section 2001(c)(3)'' and inserting ``section 2001(c)(2)''.
    (c) Effective Date.--The amendments made by this section shall apply 
in the case of decedents dying and gifts made after December 31, 1992.
SEC. 13209. REDUCTION IN DEDUCTIBLE PORTION OF BUSINESS MEALS AND 
ENTERTAINMENT.
    (a) General Rule.--Paragraph (1) of section 274(n) (relating to only 
80 percent of meal and entertainment expenses allowed as deduction) is 
amended by striking ``80 percent'' and inserting ``50 percent''.
    (b) Conforming Amendment.--The subsection heading for section 274(n) 
is amended by striking ``80'' and inserting ``50''.
    (c) Effective Date.--The amendments made by this section shall apply 
to taxable years beginning after December 31, 1993.
SEC. 13210. ELIMINATION OF DEDUCTION FOR CLUB MEMBERSHIP FEES.
    (a) In General.--Subsection (a) of section 274 (relating to 
disallowance of certain entertainment, etc., expenses) is amended by 
adding at the end thereof the following new paragraph:
        ``(3) Denial of deduction for club dues.--Notwithstanding the 
    preceding provisions of this subsection, no deduction shall be 
    allowed under this chapter for amounts paid or incurred for 
    membership in any club organized for business, pleasure, recreation, 
    or other social purpose.''
    (b) Exception for Employee Recreational Expenses Not To Apply.--
Paragraph (4) of section 274(e) is amended by adding at the end thereof 
the following: ``This paragraph shall not apply for purposes of 
subsection (a)(3).''
    (c) Effective Date.--The amendments made by this section shall apply 
to amounts paid or incurred after December 31, 1993.
SEC. 13211. DISALLOWANCE OF DEDUCTION FOR CERTAIN EMPLOYEE REMUNERATION 
IN EXCESS OF $1,000,000.
    (a) General Rule.--Section 162 (relating to trade or business 
expenses) is amended by redesignating subsection (m) as subsection (n) 
and by inserting after subsection (l) the following new subsection:
    ``(m) Certain Excessive Employee Remuneration.--
        ``(1) In general.--In the case of any publicly held corporation, 
    no deduction shall be allowed under this chapter for applicable 
    employee remuneration with respect to any covered employee to the 
    extent that the amount of such remuneration for the taxable year 
    with respect to such employee exceeds $1,000,000.
        ``(2) Publicly held corporation.--For purposes of this 
    subsection, the term `publicly held corporation' means any 
    corporation issuing any class of common equity securities required 
    to be registered under section 12 of the Securities Exchange Act of 
    1934.
        ``(3) Covered employee.--For purposes of this subsection, the 
    term `covered employee' means any employee of the taxpayer if--
            ``(A) as of the close of the taxable year, such employee is 
        the chief executive officer of the taxpayer or is an individual 
        acting in such a capacity, or
            ``(B) the total compensation of such employee for the 
        taxable year is required to be reported to shareholders under 
        the Securities Exchange Act of 1934 by reason of such employee 
        being among the 4 highest compensated officers for the taxable 
        year (other than the chief executive officer).
        ``(4) Applicable employee remuneration.--For purposes of this 
    subsection--
            ``(A) In general.--Except as otherwise provided in this 
        paragraph, the term `applicable employee remuneration' means, 
        with respect to any covered employee for any taxable year, the 
        aggregate amount allowable as a deduction under this chapter for 
        such taxable year (determined without regard to this subsection) 
        for remuneration for services performed by such employee 
        (whether or not during the taxable year).
            ``(B) Exception for remuneration payable on commission 
        basis.--The term `applicable employee remuneration' shall not 
        include any remuneration payable on a commission basis solely on 
        account of income generated directly by the individual 
        performance of the individual to whom such remuneration is 
        payable.
            ``(C) Other performance-based compensation.--The term 
        `applicable employee remuneration' shall not include any 
        remuneration payable solely on account of the attainment of one 
        or more performance goals, but only if--
                ``(i) the performance goals are determined by a 
            compensation committee of the board of directors of the 
            taxpayer which is comprised solely of 2 or more outside 
            directors,
                ``(ii) the material terms under which the remuneration 
            is to be paid, including the performance goals, are 
            disclosed to shareholders and approved by a majority of the 
            vote in a separate shareholder vote before the payment of 
            such remuneration, and
                ``(iii) before any payment of such remuneration, the 
            compensation committee referred to in clause (i) certifies 
            that the performance goals and any other material terms were 
            in fact satisfied.
            ``(D) Exception for existing binding contracts.--The term 
        `applicable employee remuneration' shall not include any 
        remuneration payable under a written binding contract which was 
        in effect on February 17, 1993, and which was not modified 
        thereafter in any material respect before such remuneration is 
        paid.
            ``(E) Remuneration.--For purposes of this paragraph, the 
        term `remuneration' includes any remuneration (including 
        benefits) in any medium other than cash, but shall not include--
                ``(i) any payment referred to in so much of section 
            3121(a)(5) as precedes subparagraph (E) thereof, and
                ``(ii) any benefit provided to or on behalf of an 
            employee if at the time such benefit is provided it is 
            reasonable to believe that the employee will be able to 
            exclude such benefit from gross income under this chapter.
        For purposes of clause (i), section 3121(a)(5) shall be applied 
        without regard to section 3121(v)(1).
            ``(F) Coordination with disallowed golden parachute 
        payments.--The dollar limitation contained in paragraph (1) 
        shall be reduced (but not below zero) by the amount (if any) 
        which would have been included in the applicable employee 
        remuneration of the covered employee for the taxable year but 
        for being disallowed under section 280G.''
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to amounts which would otherwise be deductible for taxable years 
beginning on or after January 1, 1994.
SEC. 13212. REDUCTION IN COMPENSATION TAKEN INTO ACCOUNT IN DETERMINING 
CONTRIBUTIONS AND BENEFITS UNDER QUALIFIED RETIREMENT PLANS.
    (a) Qualification Requirement.--
        (1) In general.--Section 401(a)(17) is amended--
            (A) by striking ``$200,000'' in the first sentence and 
        inserting ``$150,000'',
            (B) by striking the second sentence, and
            (C) by adding at the end the following new subparagraph:
            ``(B) Cost-of-living adjustment.--
                ``(i) In general.--If, for any calendar year after 1994, 
            the excess (if any) of--

                    ``(I) $150,000, increased by the cost-of-living 
                adjustment for the calendar year, over
                    ``(II) the dollar amount in effect under 
                subparagraph (A) for taxable years beginning in the 
                calendar year,

            is equal to or greater than $10,000, then the $150,000 
            amount under subparagraph (A) (as previously adjusted under 
            this subparagraph) for any taxable year beginning in any 
            subsequent calendar year shall be increased by the amount of 
            such excess, rounded to the next lowest multiple of $10,000.
                ``(ii) Cost-of-living adjustment.--The cost-of-living 
            adjustment for any calendar year shall be the adjustment 
            made under section 415(d) for such calendar year, except 
            that the base period for purposes of section 415(d)(1)(A) 
            shall be the calendar quarter beginning October 1, 1993.''
        (2) Conforming amendment.--Section 401(a)(17) is amended by 
    striking ``(17) A trust'' and inserting:
        ``(17) Compensation limit.--
            ``(A) In general.--A trust''.
    (b) Simplified Employee Pensions.--
        (1) In general.--Paragraphs (3)(C) and (6)(D)(ii) of section 
    408(k) are each amended by striking ``$200,000'' and inserting 
    ``$150,000''.
        (2) Cost-of-living.--Paragraph (8) of section 408(k) is amended 
    to read as follows:
        ``(8) Cost-of-living adjustment.--The Secretary shall adjust the 
    $300 amount in paragraph (2)(C) at the same time and in the same 
    manner as under section 415(d) and shall adjust the $150,000 amount 
    in paragraphs (3)(C) and (6)(D)(ii) at the same time, and by the 
    same amount, as any adjustment under section 401(a)(17)(B).''
    (c) Other Related Provisions.--
        (1) In general.--Sections 404(l) and 505(b)(7) are each 
    amended--
            (A) by striking ``$200,000'' in the first sentence and 
        inserting ``$150,000'', and
            (B) by striking the second sentence and inserting ``The 
        Secretary shall adjust the $150,000 amount at the same time, and 
        by the same amount, as any adjustment under section 
        401(a)(17)(B).''
        (2) Conforming amendment.--The heading for section 505(b)(7) is 
    amended by striking ``$200,000''.
    (d) Effective Dates.--
        (1) In general.--Except as provided in this subsection, the 
    amendments made by this section shall apply to benefits accruing in 
    plan years beginning after December 31, 1993.
        (2) Collectively bargained plans.--In the case of a plan 
    maintained pursuant to 1 or more collective bargaining agreements 
    between employee representatives and 1 or more employers ratified 
    before the date of the enactment of this Act, the amendments made by 
    this section shall not apply to contributions or benefits pursuant 
    to such agreements for plan years beginning before the earlier of--
            (A) the latest of--
                (i) January 1, 1994,
                (ii) the date on which the last of such collective 
            bargaining agreements terminates (without regard to any 
            extension, amendment, or modification of such agreements on 
            or after such date of enactment), or
                (iii) in the case of a plan maintained pursuant to 
            collective bargaining under the Railway Labor Act, the date 
            of execution of an extension or replacement of the last of 
            such collective bargaining agreements in effect on such date 
            of enactment, or
            (B) January 1, 1997.
        (3) Transition rule for state and local plans.--
            (A) In general.--In the case of an eligible participant in a 
        governmental plan (within the meaning of section 414(d) of the 
        Internal Revenue Code of 1986), the dollar limitation under 
        section 401(a)(17) of such Code shall not apply to the extent 
        the amount of compensation which is allowed to be taken into 
        account under the plan would be reduced below the amount which 
        was allowed to be taken into account under the plan as in effect 
        on July 1, 1993.
            (B) Eligible participant.--For purposes of subparagraph (A), 
        an eligible participant is an individual who first became a 
        participant in the plan during a plan year beginning before the 
        1st plan year beginning after the earlier of--
                (i) the plan year in which the plan is amended to 
            reflect the amendments made by this section, or
                (ii) December 31, 1995.
            (C) Plan must be amended to incorporate limits.--This 
        paragraph shall not apply to any eligible participant of a plan 
        unless the plan is amended so that the plan incorporates by 
        reference the dollar limitation under section 401(a)(17) of the 
        Internal Revenue Code of 1986, effective with respect to 
        noneligible participants for plan years beginning after December 
        31, 1995 (or earlier if the plan amendment so provides).

SEC. 13213. MODIFICATIONS TO DEDUCTION FOR MOVING EXPENSES.

    (a) Definition of Deductible Expenses.--
        (1) In general.--Subsection (b) of section 217 (defining moving 
    expenses) is amended to read as follows:
    ``(b) Definition of Moving Expenses.--
        ``(1) In general.--For purposes of this section, the term 
    `moving expenses' means only the reasonable expenses--
            ``(A) of moving household goods and personal effects from 
        the former residence to the new residence, and
            ``(B) of traveling (including lodging) from the former 
        residence to the new place of residence.
    Such term shall not include any expenses for meals.
        ``(2) Individuals other than taxpayer.--In the case of any 
    individual other than the taxpayer, expenses referred to in 
    paragraph (1) shall be taken into account only if such individual 
    has both the former residence and the new residence as his principal 
    place of abode and is a member of the taxpayer's household.''
        (2) Conforming amendments.--
            (A) Section 217 is amended by striking subsection (e).
            (B) Subsection (f) of section 217 is amended to read as 
        follows:
    ``(f) Self-Employed Individual.--For purposes of this section, the 
term `self-employed individual' means an individual who performs 
personal services--
        ``(1) as the owner of the entire interest in an unincorporated 
    trade or business, or
        ``(2) as a partner in a partnership carrying on a trade or 
    business.''
            (C) Paragraph (3) of section 217(g) is amended by inserting 
        ``and'' at the end of subparagraph (A), by striking subparagraph 
        (B), and by redesignating subparagraph (C) as subparagraph (B).
            (D) Subsection (h) of section 217 is amended by striking 
        paragraph (1) and redesignating the following paragraphs 
        accordingly.
            (E) Section 1001 is amended by striking subsection (f).
            (F) Subsection (e) of section 1016 is amended to read as 
        follows:
    ``(e) Cross Reference.--
          ``For treatment of separate mineral interests as one property, 
        see section 614.''

    (b) Increase in Mileage Requirement.--Paragraph (1) of section 
217(c) is amended by striking ``35 miles'' each place it appears and 
inserting ``50 miles''.
    (c) Deduction Allowed in Computing Adjusted Gross Income.--
        (1) In general.--Subsection (a) of section 62 (defining adjusted 
    gross income) is amended by inserting after paragraph (14) the 
    following new paragraph:
        ``(15) Moving expenses.--The deduction allowed by section 217.''
        (2) Conforming amendment.--Subsection (b) of section 67 is 
    amended by striking paragraph (6) and redesignating the following 
    paragraphs accordingly.
    (d) Exclusion of Employer Reimbursement for Deductible Expenses.--
        (1) In general.--Subsection (a) of section 132 (relating to 
    certain fringe benefits) is amended by striking ``or'' at the end of 
    paragraph (4), by striking the period at the end of paragraph (5) 
    and inserting ``, or'', and by adding at the end thereof the 
    following new paragraph:
        ``(6) qualified moving expense reimbursement.''
        (2) Qualified moving expense reimbursement defined.--Section 132 
    is amended by redesignating subsections (g), (h), (i), (j), (k), and 
    (l), as subsections (h), (i), (j), (k), (l), and (m), respectively, 
    and by inserting after subsection (f) the following new subsection:
    ``(g) Qualified Moving Expense Reimbursement.--For purposes of this 
section, the term `qualified moving expense reimbursement' means any 
amount received (directly or indirectly) by an individual from an 
employer as a payment for (or a reimbursement of) expenses which would 
be deductible as moving expenses under section 217 if directly paid or 
incurred by the individual. Such term shall not include any payment for 
(or reimbursement of) an expense actually deducted by the individual in 
a prior taxable year.''
        (3) Conforming amendments.--
            (A) Section 82 is amended by striking ``There shall'' and 
        inserting ``Except as provided in section 132(a)(6), there 
        shall''.
            (B) Subsection (j) of section 132 (as redesignated by 
        paragraph (2)) is amended by striking ``subsection (f)'' in 
        paragraph (4)(B)(iii) thereof and inserting ``subsection (h)''.
            (C) Subsection (l) of section 132 (as redesignated by 
        paragraph (2)) is amended by striking ``subsection (e)'' and 
        inserting ``subsections (e) and (g)''.
            (D) Section 4977(c) is amended by striking ``section 
        132(g)(2)'' and inserting ``section 132(i)(2)''.
    (e) Effective Date.--The amendments made by this section shall apply 
to expenses incurred after December 31, 1993; except that the amendments 
made by subsection (d) shall apply to reimbursements or other payments 
in respect of expenses incurred after such date.
SEC. 13214. SIMPLIFICATION OF INDIVIDUAL ESTIMATED TAX SAFE HARBOR BASED 
ON LAST YEAR'S TAX.
    (a) In General.--Paragraph (1) of section 6654(d) (relating to 
amount of required estimated tax installments) is amended by striking 
subparagraphs (C), (D), (E), and (F) and by inserting the following new 
subparagraph:
            ``(C) Limitation on use of preceding year's tax.--
                ``(i) In general.--If the adjusted gross income shown on 
            the return of the individual for the preceding taxable year 
            exceeds $150,000, clause (ii) of subparagraph (B) shall be 
            applied by substituting `110 percent' for `100 percent'.
                ``(ii) Separate returns.--In the case of a married 
            individual (within the meaning of section 7703) who files a 
            separate return for the taxable year for which the amount of 
            the installment is being determined, clause (i) shall be 
            applied by substituting `$75,000' for `$150,000'.
                ``(iii) Special rule.--In the case of an estate or 
            trust, adjusted gross income shall be determined as provided 
            in section 67(e).''
    (b) Conforming Amendments.--
        (1) Subparagraph (A) of section 6654(j)(3) is amended by 
    striking ``and subsection (d)(1)(C)(iii) shall not apply''.
        (2) Paragraph (4) of section 6654(l) is amended by striking 
    ``paragraphs (1)(C)(iv) and (2)(B)(i) of subsection (d)'' and 
    inserting ``subsection (d)(2)(B)(i)''.
    (c) Effective Date.--The amendments made by this section shall apply 
to taxable years beginning after December 31, 1993.
SEC. 13215. SOCIAL SECURITY AND TIER 1 RAILROAD RETIREMENT BENEFITS.
    (a) Additional Inclusion for Certain Taxpayers.--
        (1) In general.--Subsection (a) of section 86 (relating to 
    social security and tier 1 railroad retirement benefits) is amended 
    by adding at the end the following new paragraph:
        ``(2) Additional amount.--In the case of a taxpayer with respect 
    to whom the amount determined under subsection (b)(1)(A) exceeds the 
    adjusted base amount, the amount included in gross income under this 
    section shall be equal to the lesser of--
            ``(A) the sum of--
                ``(i) 85 percent of such excess, plus
                ``(ii) the lesser of the amount determined under 
            paragraph (1) or an amount equal to one-half of the 
            difference between the adjusted base amount and the base 
            amount of the taxpayer, or
            ``(B) 85 percent of the social security benefits received 
        during the taxable year.''
        (2) Conforming amendments.--Subsection (a) of section 86 is 
    amended--
            (A) by striking ``Gross'' and inserting:
        ``(1) In general.--Except as provided in paragraph (2), gross'', 
    and
            (B) by redesignating paragraphs (1) and (2) as subparagraphs 
        (A) and (B), respectively.
    (b) Adjusted Base Amount.--Section 86(c) (defining base amount) is 
amended to read as follows:
    ``(c) Base Amount and Adjusted Base Amount.--For purposes of this 
section--
        ``(1) Base amount.--The term `base amount' means--
            ``(A) except as otherwise provided in this paragraph, 
        $25,000,
            ``(B) $32,000 in the case of a joint return, and
            ``(C) zero in the case of a taxpayer who--
                ``(i) is married as of the close of the taxable year 
            (within the meaning of section 7703) but does not file a 
            joint return for such year, and
                ``(ii) does not live apart from his spouse at all times 
            during the taxable year.
        ``(2) Adjusted base amount.--The term `adjusted base amount' 
    means--
            ``(A) except as otherwise provided in this paragraph, 
        $34,000,
            ``(B) $44,000 in the case of a joint return, and
            ``(C) zero in the case of a taxpayer described in paragraph 
        (1)(C).''
    (c) Transfers to the Hospital Insurance Trust Fund.--
        (1) In general.--Paragraph (1) of section 121(e) of the Social 
    Security Amendments of 1983 (Public Law 92-21) is amended by--
            (A) striking ``There'' and inserting:
            ``(A) There'';
            (B) inserting ``(i)'' immediately following ``amounts 
        equivalent to''; and
            (C) striking the period and inserting the following: ``, 
        less (ii) the amounts equivalent to the aggregate increase in 
        tax liabilities under chapter 1 of the Internal Revenue Code of 
        1986 which is attributable to the amendments to section 86 of 
        such Code made by section 13215 of the Revenue Reconciliation 
        Act of 1993.
            ``(B) There are hereby appropriated to the hospital 
        insurance trust fund amounts equal to the increase in tax 
        liabilities described in subparagraph (A)(ii). Such appropriated 
        amounts shall be transferred from the general fund of the 
        Treasury on the basis of estimates of such tax liabilities made 
        by the Secretary of the Treasury. Transfers shall be made 
        pursuant to a schedule made by the Secretary of the Treasury 
        that takes into account estimated timing of collection of such 
        liabilities.''
        (2) Definition.--Paragraph (3) of section 121(e) of such Act is 
    amended by redesignating subparagraph (B) as subparagraph (C), and 
    by inserting after subparagraph (A) the following new subparagraph:
            ``(B) Hospital insurance trust fund.--The term `hospital 
        insurance trust fund' means the fund established pursuant to 
        section 1817 of the Social Security Act.''.
        (3) Conforming amendment.--Paragraph (2) of section 121(e) of 
    such Act is amended in the first sentence by striking ``paragraph 
    (1)'' and inserting ``paragraph (1)(A)''.
        (4) Technical amendments.--Paragraph (1)(A) of section 121(e) of 
    such Act, as redesignated and amended by paragraph (1), is amended 
    by striking ``1954'' and inserting ``1986''.
    (d) Effective Date.--The amendments made by subsections (a) and (b) 
shall apply to taxable years beginning after December 31, 1993.

                PART II--PROVISIONS AFFECTING BUSINESSES

SEC. 13221. INCREASE IN TOP MARGINAL RATE UNDER SECTION 11.

    (a) General Rule.--Paragraph (1) of section 11(b) (relating to 
amount of tax) is amended--
        (1) by striking ``and'' at the end of subparagraph (B),
        (2) by striking subparagraph (C) and inserting the following:
            ``(C) 34 percent of so much of the taxable income as exceeds 
        $75,000 but does not exceed $10,000,000, and
            ``(D) 35 percent of so much of the taxable income as exceeds 
        $10,000,000.'', and
        (3) by adding at the end thereof the following new sentence: 
    ``In the case of a corporation which has taxable income in excess of 
    $15,000,000, the amount of the tax determined under the foregoing 
    provisions of this paragraph shall be increased by an additional 
    amount equal to the lesser of (i) 3 percent of such excess, or (ii) 
    $100,000.''
    (b) Certain Personal Service Corporations.--Paragraph (2) of section 
11(b) is amended by striking ``34 percent'' and inserting ``35 
percent''.
    (c) Conforming Amendments.--
        (1) Clause (iii) of section 852(b)(3)(D) is amended by striking 
    ``66 percent'' and inserting ``65 percent''.
        (2) Subsection (a) of section 1201 is amended by striking ``34 
    percent'' each place it appears and inserting ``35 percent''.
        (3) Paragraphs (1) and (2) of section 1445(e) are each amended 
    by striking ``34 percent'' and inserting ``35 percent''.
    (d) Effective Date.--The amendments made by this section shall apply 
to taxable years beginning on or after January 1, 1993; except that the 
amendment made by subsection (c)(3) shall take effect on the date of the 
enactment of this Act.

SEC. 13222. DENIAL OF DEDUCTION FOR LOBBYING EXPENSES.

    (a) Disallowance of Deduction.--Section 162(e) (relating to 
appearances, etc., with respect to legislation) is amended to read as 
follows:
    ``(e) Denial of Deduction for Certain Lobbying and Political 
Expenditures.--
        ``(1) In general.--No deduction shall be allowed under 
    subsection (a) for any amount paid or incurred in connection with--
            ``(A) influencing legislation,
            ``(B) participation in, or intervention in, any political 
        campaign on behalf of (or in opposition to) any candidate for 
        public office,
            ``(C) any attempt to influence the general public, or 
        segments thereof, with respect to elections, legislative 
        matters, or referendums, or
            ``(D) any direct communication with a covered executive 
        branch official in an attempt to influence the official actions 
        or positions of such official.
        ``(2) Exception for local legislation.--In the case of any 
    legislation of any local council or similar governing body--
            ``(A) paragraph (1)(A) shall not apply, and
            ``(B) the deduction allowed by subsection (a) shall include 
        all ordinary and necessary expenses (including, but not limited 
        to, traveling expenses described in subsection (a)(2) and the 
        cost of preparing testimony) paid or incurred during the taxable 
        year in carrying on any trade or business--
                ``(i) in direct connection with appearances before, 
            submission of statements to, or sending communications to 
            the committees, or individual members, of such council or 
            body with respect to legislation or proposed legislation of 
            direct interest to the taxpayer, or
                ``(ii) in direct connection with communication of 
            information between the taxpayer and an organization of 
            which the taxpayer is a member with respect to any such 
            legislation or proposed legislation which is of direct 
            interest to the taxpayer and to such organization,
        and that portion of the dues so paid or incurred with respect to 
        any organization of which the taxpayer is a member which is 
        attributable to the expenses of the activities described in 
        clauses (i) and (ii) carried on by such organization.
        ``(3) Application to dues of tax-exempt organizations.--No 
    deduction shall be allowed under subsection (a) for the portion of 
    dues or other similar amounts paid by the taxpayer to an 
    organization which is exempt from tax under this subtitle which the 
    organization notifies the taxpayer under section 6033(e)(1)(A)(ii) 
    is allocable to expenditures to which paragraph (1) applies.
        ``(4) Influencing legislation.--For purposes of this 
    subsection--
            ``(A) In general.--The term `influencing legislation' means 
        any attempt to influence any legislation through communication 
        with any member or employee of a legislative body, or with any 
        government official or employee who may participate in the 
        formulation of legislation.
            ``(B) Legislation.--The term `legislation' has the meaning 
        given such term by section 4911(e)(2).
        ``(5) Other special rules.--
            ``(A) Exception for certain taxpayers.--In the case of any 
        taxpayer engaged in the trade or business of conducting 
        activities described in paragraph (1), paragraph (1) shall not 
        apply to expenditures of the taxpayer in conducting such 
        activities directly on behalf of another person (but shall apply 
        to payments by such other person to the taxpayer for conducting 
        such activities).
            ``(B) De minimis exception.--
                ``(i) In general.--Paragraph (1) shall not apply to any 
            in-house expenditures for any taxable year if such 
            expenditures do not exceed $2,000. In determining whether a 
            taxpayer exceeds the $2,000 limit under this clause, there 
            shall not be taken into account overhead costs otherwise 
            allocable to activities described in paragraphs (1)(A) and 
            (D).
                ``(ii) In-house expenditures.--For purposes of clause 
            (i), the term `in-house expenditures' means expenditures 
            described in paragraphs (1)(A) and (D) other than--

                    ``(I) payments by the taxpayer to a person engaged 
                in the trade or business of conducting activities 
                described in paragraph (1) for the conduct of such 
                activities on behalf of the taxpayer, or
                    ``(II) dues or other similar amounts paid or 
                incurred by the taxpayer which are allocable to 
                activities described in paragraph (1).

            ``(C) Expenses incurred in connection with lobbying and 
        political activities.--Any amount paid or incurred for research 
        for, or preparation, planning, or coordination of, any activity 
        described in paragraph (1) shall be treated as paid or incurred 
        in connection with such activity.
        ``(6) Covered executive branch official.--For purposes of this 
    subsection, the term `covered executive branch official' means--
            ``(A) the President,
            ``(B) the Vice President,
            ``(C) any officer or employee of the White House Office of 
        the Executive Office of the President, and the 2 most senior 
        level officers of each of the other agencies in such Executive 
        Office, and
            ``(D)(i) any individual serving in a position in level I of 
        the Executive Schedule under section 5312 of title 5, United 
        States Code, (ii) any other individual designated by the 
        President as having Cabinet level status, and (iii) any 
        immediate deputy of an individual described in clause (i) or 
        (ii).
        ``(7) Special rule for indian tribal governments.--For purposes 
    of this subsection, an Indian tribal government shall be treated in 
    the same manner as a local council or similar governing body.
        ``(8) Cross reference.--
          ``For reporting requirements and alternative taxes related to 
        this subsection, see section 6033(e).''

    (b) Disallowance of Charitable Deduction in Certain Cases.--Section 
170(f) (relating to disallowance of deduction in certain cases and 
special rules), as amended by section 13172, is amended by adding at the 
end the following new paragraph:
        ``(9) Denial of deduction where contribution for lobbying 
    activities.--No deduction shall be allowed under this section for a 
    contribution to an organization which conducts activities to which 
    section 162(e)(1) applies on matters of direct financial interest to 
    the donor's trade or business, if a principal purpose of the 
    contribution was to avoid Federal income tax by securing a deduction 
    for such activities under this section which would be disallowed by 
    reason of section 162(e) if the donor had conducted such activities 
    directly. No deduction shall be allowed under section 162(a) for any 
    amount for which a deduction is disallowed under the preceding 
    sentence.''
    (c) Reporting Requirements.--Section 6033 (relating to returns by 
exempt organizations) is amended by redesignating subsection (e) as 
subsection (f) and by inserting after subsection (d) the following new 
subsection:
    ``(e) Special Rules Relating to Lobbying Activities.--
        ``(1) Reporting requirements.--
            ``(A) In general.--If this subsection applies to an 
        organization for any taxable year, such organization--
                ``(i) shall include on any return required to be filed 
            under subsection (a) for such year information setting forth 
            the total expenditures of the organization to which section 
            162(e)(1) applies and the total amount of the dues or other 
            similar amounts paid to the organization to which such 
            expenditures are allocable, and
                ``(ii) except as provided in paragraphs (2)(A)(i) and 
            (3), shall, at the time of assessment or payment of such 
            dues or other similar amounts, provide notice to each person 
            making such payment which contains a reasonable estimate of 
            the portion of such dues or other similar amounts to which 
            such expenditures are so allocable.
            ``(B) Organizations to which subsection applies.--
                ``(i) In general.--This subsection shall apply to any 
            organization which is exempt from taxation under this 
            subtitle other than an organization described in section 
            501(c)(3).
                ``(ii) Special rule for in-house expenditures.--This 
            subsection shall not apply to the in-house expenditures 
            (within the meaning of section 162(e)(5)(B)(ii)) of an 
            organization for a taxable year if such expenditures do not 
            exceed $2,000. In determining whether a taxpayer exceeds the 
            $2,000 limit under this clause, there shall not be taken 
            into account overhead costs otherwise allocable to 
            activities described in subparagraphs (A) and (D) of section 
            162(e)(1).
            ``(C) Allocation.--For purposes of this paragraph--
                ``(i) In general.--Expenditures to which section 
            162(e)(1) applies shall be treated as paid out of dues or 
            other similar amounts to the extent thereof.
                ``(ii) Carryover of lobbying expenditures in excess of 
            dues.--If expenditures to which section 162(e)(1) applies 
            exceed the dues or other similar amounts for any taxable 
            year, such excess shall be treated as expenditures to which 
            section 162(e)(1) applies which are paid or incurred by the 
            organization during the following taxable year.
        ``(2) Tax imposed where organization does not notify.--
            ``(A) In general.--If an organization--
                ``(i) elects not to provide the notices described in 
            paragraph (1)(A) for any taxable year, or
                ``(ii) fails to include in such notices the amount 
            allocable to expenditures to which section 162(e)(1) applies 
            (determined on the basis of actual amounts rather than the 
            reasonable estimates under paragraph (1)(A)(ii)),
        then there is hereby imposed on such organization for such 
        taxable year a tax in an amount equal to the product of the 
        highest rate of tax imposed by section 11 for the taxable year 
        and the aggregate amount not included in such notices by reason 
        of such election or failure.
            ``(B) Waiver where future adjustments made.--The Secretary 
        may waive the tax imposed by subparagraph (A)(ii) for any 
        taxable year if the organization agrees to adjust its estimates 
        under paragraph (1)(A)(ii) for the following taxable year to 
        correct any failures.
            ``(C) Tax treated as income tax.--For purposes of this 
        title, the tax imposed by subparagraph (A) shall be treated in 
        the same manner as a tax imposed by chapter 1 (relating to 
        income taxes).
        ``(3) Exception where dues generally nondeductible.--Paragraph 
    (1)(A) shall not apply to an organization which establishes to the 
    satisfaction of the Secretary that substantially all of the dues or 
    other similar amounts paid by persons to such organization are not 
    deductible without regard to section 162(e).''
    (d) Conforming Amendment.--Section 7871(a)(6) is amended by striking 
subparagraph (B) and by redesignating subparagraphs (C) and (D) as 
subparagraphs (B) and (C), respectively.
    (e) Effective Date.--The amendments made by this section shall apply 
to amounts paid or incurred after December 31, 1993.
SEC. 13223. MARK TO MARKET ACCOUNTING METHOD FOR SECURITIES DEALERS.
    (a) General Rule.--Subpart D of part II of subchapter E of chapter 1 
(relating to inventories) is amended by adding at the end thereof the 
following new section:
``SEC. 475. MARK TO MARKET ACCOUNTING METHOD FOR DEALERS IN SECURITIES.
    ``(a) General Rule.--Notwithstanding any other provision of this 
subpart, the following rules shall apply to securities held by a dealer 
in securities:
        ``(1) Any security which is inventory in the hands of the dealer 
    shall be included in inventory at its fair market value.
        ``(2) In the case of any security which is not inventory in the 
    hands of the dealer and which is held at the close of any taxable 
    year--
            ``(A) the dealer shall recognize gain or loss as if such 
        security were sold for its fair market value on the last 
        business day of such taxable year, and
            ``(B) any gain or loss shall be taken into account for such 
        taxable year.
    Proper adjustment shall be made in the amount of any gain or loss 
    subsequently realized for gain or loss taken into account under the 
    preceding sentence. The Secretary may provide by regulations for the 
    application of this paragraph at times other than the times provided 
    in this paragraph.
    ``(b) Exceptions.--
        ``(1) In general.--Subsection (a) shall not apply to--
            ``(A) any security held for investment,
            ``(B)(i) any security described in subsection (c)(2)(C) 
        which is acquired (including originated) by the taxpayer in the 
        ordinary course of a trade or business of the taxpayer and which 
        is not held for sale, and (ii) any obligation to acquire a 
        security described in clause (i) if such obligation is entered 
        into in the ordinary course of such trade or business and is not 
        held for sale, and
            ``(C) any security which is a hedge with respect to--
                ``(i) a security to which subsection (a) does not apply, 
            or
                ``(ii) a position, right to income, or a liability which 
            is not a security in the hands of the taxpayer.
    To the extent provided in regulations, subparagraph (C) shall not 
    apply to any security held by a person in its capacity as a dealer 
    in securities.
        ``(2) Identification required.--A security shall not be treated 
    as described in subparagraph (A), (B), or (C) of paragraph (1), as 
    the case may be, unless such security is clearly identified in the 
    dealer's records as being described in such subparagraph before the 
    close of the day on which it was acquired, originated, or entered 
    into (or such other time as the Secretary may by regulations 
    prescribe).
        ``(3) Securities subsequently not exempt.--If a security ceases 
    to be described in paragraph (1) at any time after it was identified 
    as such under paragraph (2), subsection (a) shall apply to any 
    changes in value of the security occurring after the cessation.
        ``(4) Special rule for property held for investment.--To the 
    extent provided in regulations, subparagraph (A) of paragraph (1) 
    shall not apply to any security described in subparagraph (D) or (E) 
    of subsection (c)(2) which is held by a dealer in such securities.
    ``(c) Definitions.--For purposes of this section--
        ``(1) Dealer in securities defined.--The term `dealer in 
    securities' means a taxpayer who--
            ``(A) regularly purchases securities from or sells 
        securities to customers in the ordinary course of a trade or 
        business; or
            ``(B) regularly offers to enter into, assume, offset, assign 
        or otherwise terminate positions in securities with customers in 
        the ordinary course of a trade or business.
        ``(2) Security defined.--The term `security' means any--
            ``(A) share of stock in a corporation;
            ``(B) partnership or beneficial ownership interest in a 
        widely held or publicly traded partnership or trust;
            ``(C) note, bond, debenture, or other evidence of 
        indebtedness;
            ``(D) interest rate, currency, or equity notional principal 
        contract;
            ``(E) evidence of an interest in, or a derivative financial 
        instrument in, any security described in subparagraph (A), (B), 
        (C), or (D), or any currency, including any option, forward 
        contract, short position, and any similar financial instrument 
        in such a security or currency; and
            ``(F) position which--
                ``(i) is not a security described in subparagraph (A), 
            (B), (C), (D), or (E),
                ``(ii) is a hedge with respect to such a security, and
                ``(iii) is clearly identified in the dealer's records as 
            being described in this subparagraph before the close of the 
            day on which it was acquired or entered into (or such other 
            time as the Secretary may by regulations prescribe).
    Subparagraph (E) shall not include any contract to which section 
    1256(a) applies.
        ``(3) Hedge.--The term `hedge' means any position which reduces 
    the dealer's risk of interest rate or price changes or currency 
    fluctuations, including any position which is reasonably expected to 
    become a hedge within 60 days after the acquisition of the position.
    ``(d) Special Rules.--For purposes of this section--
        ``(1) Coordination with certain rules.--The rules of sections 
    263(g), 263A, and 1256(a) shall not apply to securities to which 
    subsection (a) applies, and section 1091 shall not apply (and 
    section 1092 shall apply) to any loss recognized under subsection 
    (a).
        ``(2) Improper identification.--If a taxpayer--
            ``(A) identifies any security under subsection (b)(2) as 
        being described in subsection (b)(1) and such security is not so 
        described, or
            ``(B) fails under subsection (c)(2)(F)(iii) to identify any 
        position which is described in subsection (c)(2)(F) (without 
        regard to clause (iii) thereof) at the time such identification 
        is required,
    the provisions of subsection (a) shall apply to such security or 
    position, except that any loss under this section prior to the 
    disposition of the security or position shall be recognized only to 
    the extent of gain previously recognized under this section (and not 
    previously taken into account under this paragraph) with respect to 
    such security or position.
        ``(3) Character of gain or loss.--
            ``(A) In general.--Except as provided in subparagraph (B) or 
        section 1236(b)--
                ``(i) In general.--Any gain or loss with respect to a 
            security under subsection (a)(2) shall be treated as 
            ordinary income or loss.
                ``(ii) Special rule for dispositions.--If--

                    ``(I) gain or loss is recognized with respect to a 
                security before the close of the taxable year, and
                    ``(II) subsection (a)(2) would have applied if the 
                security were held as of the close of the taxable year,

            such gain or loss shall be treated as ordinary income or 
            loss.
            ``(B) Exception.--Subparagraph (A) shall not apply to any 
        gain or loss which is allocable to a period during which--
                ``(i) the security is described in subsection (b)(1)(C) 
            (without regard to subsection (b)(2)),
                ``(ii) the security is held by a person other than in 
            connection with its activities as a dealer in securities, or
                ``(iii) the security is improperly identified (within 
            the meaning of subparagraph (A) or (B) of paragraph (2)).
    ``(e) Regulatory Authority.--The Secretary shall prescribe such 
regulations as may be necessary or appropriate to carry out the purposes 
of this section, including rules--
        ``(1) to prevent the use of year-end transfers, related parties, 
    or other arrangements to avoid the provisions of this section, and
        ``(2) to provide for the application of this section to any 
    security which is a hedge which cannot be identified with a specific 
    security, position, right to income, or liability.''
    (b) Conforming Amendments.--
        (1) Paragraph (1) of section 988(d) is amended--
            (A) by striking ``section 1256'' and inserting ``section 475 
        or 1256'', and
            (B) by striking ``1092 and 1256'' and inserting ``475, 1092, 
        and 1256''.
        (2) The table of sections for subpart D of part II of subchapter 
    E of chapter 1 is amended by adding at the end thereof the following 
    new item:
        ``Sec. 475. Mark to market accounting method for dealers in 
                  securities.''

    (c) Effective Date.--
        (1) In general.--The amendments made by this section shall apply 
    to all taxable years ending on or after December 31, 1993.
        (2) Change in method of accounting.--In the case of any taxpayer 
    required by this section to change its method of accounting for any 
    taxable year--
            (A) such change shall be treated as initiated by the 
        taxpayer,
            (B) such change shall be treated as made with the consent of 
        the Secretary, and
            (C) except as provided in paragraph (3), the net amount of 
        the adjustments required to be taken into account by the 
        taxpayer under section 481 of the Internal Revenue Code of 1986 
        shall be taken into account ratably over the 5-taxable year 
        period beginning with the first taxable year ending on or after 
        December 31, 1993.
        (3) Special rule for floor specialists and market makers.--
            (A) In general.--If--
                (i) a taxpayer (or any predecessor) used the last-in 
            first-out (LIFO) method of accounting with respect to any 
            qualified securities for the 5-taxable year period ending 
            with its last taxable year ending before December 31, 1993, 
            and
                (ii) any portion of the net amount described in 
            paragraph (2)(C) is attributable to the use of such method 
            of accounting,
        then paragraph (2)(C) shall be applied by taking such portion 
        into account ratably over the 15-taxable year period beginning 
        with the first taxable year ending on or after December 31, 
        1993.
            (B) Qualified security.--For purposes of this paragraph, the 
        term ``qualified security'' means any security acquired--
                (i) by a floor specialist (as defined in section 
            1236(d)(2) of the Internal Revenue Code of 1986) in 
            connection with the specialist's duties as a specialist on 
            an exchange, but only if the security is one in which the 
            specialist is registered with the exchange, or
                (ii) by a taxpayer who is a market maker in connection 
            with the taxpayer's duties as a market maker, but only if--

                    (I) the security is included on the National 
                Association of Security Dealers Automated Quotation 
                System,
                    (II) the taxpayer is registered as a market maker in 
                such security with the National Association of Security 
                Dealers, and
                    (III) as of the last day of the taxable year 
                preceding the taxpayer's first taxable year ending on or 
                after December 31, 1993, the taxpayer (or any 
                predecessor) has been actively and regularly engaged as 
                a market maker in such security for the 2-year period 
                ending on such date (or, if shorter, the period 
                beginning 61 days after the security was listed in such 
                quotation system and ending on such date).

SEC. 13224. CLARIFICATION OF TREATMENT OF CERTAIN FSLIC FINANCIAL 
ASSISTANCE.
    (a) General Rule.--For purposes of chapter 1 of the Internal Revenue 
Code of 1986--
        (1) any FSLIC assistance with respect to any loss of principal, 
    capital, or similar amount upon the disposition of any asset shall 
    be taken into account as compensation for such loss for purposes of 
    section 165 of such Code, and
        (2) any FSLIC assistance with respect to any debt shall be taken 
    into account for purposes of section 166, 585, or 593 of such Code 
    in determining whether such debt is worthless (or the extent to 
    which such debt is worthless) and in determining the amount of any 
    addition to a reserve for bad debts arising from the worthlessness 
    or partial worthlessness of such debts.
    (b) FSLIC Assistance.--For purposes of this section, the term 
``FSLIC assistance'' means any assistance (or right to assistance) with 
respect to a domestic building and loan association (as defined in 
section 7701(a)(19) of such Code without regard to subparagraph (C) 
thereof) under section 406(f) of the National Housing Act or section 21A 
of the Federal Home Loan Bank Act (or under any similar provision of 
law).
    (c) Effective Date.--
        (1) In general.--Except as otherwise provided in this 
    subsection--
            (A) The provisions of this section shall apply to taxable 
        years ending on or after March 4, 1991, but only with respect to 
        FSLIC assistance not credited before March 4, 1991.
            (B) If any FSLIC assistance not credited before March 4, 
        1991, is with respect to a loss sustained or charge-off in a 
        taxable year ending before March 4, 1991, for purposes of 
        determining the amount of any net operating loss carryover to a 
        taxable year ending on or after March 4, 1991, the provisions of 
        this section shall apply to such assistance for purposes of 
        determining the amount of the net operating loss for the taxable 
        year in which such loss was sustained or debt written off. 
        Except as provided in the preceding sentence, this section shall 
        not apply to any FSLIC assistance with respect to a loss 
        sustained or charge-off in a taxable year ending before March 4, 
        1991.
        (2) Exceptions.--The provisions of this section shall not apply 
    to any assistance to which the amendments made by section 1401(a)(3) 
    of the Financial Institutions Reform, Recovery, and Enforcement Act 
    of 1989 apply.

SEC. 13225. MODIFICATION OF CORPORATE ESTIMATED TAX RULES.

    (a) Increase in Required Installment Based on Current Year Tax.--
        (1) In general.--Clause (i) of section 6655(d)(1)(B) (relating 
    to amount of required installment) is amended by striking ``91 
    percent'' each place it appears and inserting ``100 percent''.
        (2) Conforming amendments.--
            (A) Subsection (d) of section 6655 is amended--
                (i) by striking paragraph (3), and
                (ii) by striking ``91 percent'' in the paragraph heading 
            of paragraph (2) and inserting ``100 percent''.
            (B) Clause (ii) of section 6655(e)(2)(B) is amended by 
        striking the table contained therein and inserting the 
        following:
            
                                                                 The    
            ``In the case of the following
                                                            applicable  
              required installments:
                                                          percentage is:
              1st.......................................


                                                                 254    

              2nd.......................................


                                                                 504    

              3rd.......................................


                                                                 754    

              4th.......................................


                                                              100.''    

            (C) Clause (i) of section 6655(e)(3)(A) is amended by 
        striking ``91 percent'' and inserting ``100 percent''.
    (b) Modification of Periods for Applying Annualization.--
        (1) Clause (i) of section 6655(e)(2)(A) is amended--
            (A) by striking ``or for the first 5 months'' in subclause 
        (II),
            (B) by striking ``or for the first 8 months'' in subclause 
        (III), and
            (C) by striking ``or for the first 11 months'' in subclause 
        (IV).
        (2) Paragraph (2) of section 6655(e) is amended by adding at the 
    end thereof the following new subparagraph:
            ``(C) Election for different annualization periods.--
                ``(i) If the taxpayer makes an election under this 
            clause--

                    ``(I) subclause (I) of subparagraph (A)(i) shall be 
                applied by substituting `2 months' for `3 months',
                    ``(II) subclause (II) of subparagraph (A)(i) shall 
                be applied by substituting `4 months' for `3 months',
                    ``(III) subclause (III) of subparagraph (A)(i) shall 
                be applied by substituting `7 months' for `6 months', 
                and
                    ``(IV) subclause (IV) of subparagraph (A)(i) shall 
                be applied by substituting `10 months' for `9 months'.

                ``(ii) If the taxpayer makes an election under this 
            clause--

                    ``(I) subclause (II) of subparagraph (A)(i) shall be 
                applied by substituting `5 months' for `3 months',
                    ``(II) subclause (III) of subparagraph (A)(i) shall 
                be applied by substituting `8 months' for `6 months', 
                and
                    ``(III) subclause (IV) of subparagraph (A)(i) shall 
                be applied by substituting `11 months' for `9 months'.

                ``(iii) An election under clause (i) or (ii) shall apply 
            to the taxable year for which made and such an election 
            shall be effective only if made on or before the date 
            required for the payment of the first required installment 
            for such taxable year.''
        (3) The last sentence of section 6655(g)(3) is amended by 
    striking ``and subsection (e)(2)(A)'' and inserting ``and, except in 
    the case of an election under subsection (e)(2)(C), subsection 
    (e)(2)(A)''.
    (c) Effective Date.--The amendments made by this section shall apply 
to taxable years beginning after December 31, 1993.
SEC. 13226. MODIFICATIONS OF DISCHARGE OF INDEBTEDNESS PROVISIONS.
    (a) Repeal of Stock for Debt Exception in Determining Income From 
Discharge of Indebtedness.--
        (1) In general.--Subsection (e) of section 108 is amended--
            (A) by striking paragraph (10) and by redesignating 
        paragraph (11) as paragraph (10), and
            (B) by amending paragraph (8) to read as follows:
        ``(8) Indebtedness satisfied by corporation's stock.--For 
    purposes of determining income of a debtor from discharge of 
    indebtedness, if a debtor corporation transfers stock to a creditor 
    in satisfaction of its indebtedness, such corporation shall be 
    treated as having satisfied the indebtedness with an amount of money 
    equal to the fair market value of the stock.''
        (2) Conforming amendments.--
            (A) Subparagraph (C) of section 382(l)(5) is amended to read 
        as follows:
            ``(C) Coordination with section 108.--In applying section 
        108(e)(8) to any case to which subparagraph (A) applies, there 
        shall not be taken into account any indebtedness for interest 
        described in subparagraph (B).''
            (B) Section 108(e)(6) is amended by striking ``For'' and 
        inserting ``Except as provided in regulations, for''.
        (3) Effective date.--
            (A) In general.--Except as otherwise provided in this 
        paragraph, the amendments made by this subsection shall apply to 
        stock transferred after December 31, 1994, in satisfaction of 
        any indebtedness.
            (B) Exception for title 11 cases.--The amendments made by 
        this subsection shall not apply to stock transferred in 
        satisfaction of any indebtedness if such transfer is in a title 
        11 or similar case (as defined in section 368(a)(3)(A) of the 
        Internal Revenue Code of 1986) which was filed on or before 
        December 31, 1993.
    (b) Tax Attributes Subject to Reduction.--
        (1) Minimum tax credit.--Section 108(b)(2) (relating to tax 
    attributes affected; order of reduction) is amended by redesignating 
    subparagraphs (C), (D), and (E) as subparagraphs (D), (E), and (F) 
    and by adding after subparagraph (B) the following new subparagraph:
            ``(C) Minimum tax credit.--The amount of the minimum tax 
        credit available under section 53(b) as of the beginning of the 
        taxable year immediately following the taxable year of the 
        discharge.''
        (2) Passive activity losses and credits.--Section 108(b)(2), as 
    amended by paragraph (1), is amended by redesignating subparagraph 
    (F) as subparagraph (G) and by adding after subparagraph (E) the 
    following new subparagraph:
            ``(F) Passive activity loss and credit carryovers.--Any 
        passive activity loss or credit carryover of the taxpayer under 
        section 469(b) from the taxable year of the discharge.''
        (3) Conforming amendments.--
            (A) Subparagraph (B) of section 108(b)(3) is amended to read 
        as follows:
            ``(B) Credit carryover reduction.--The reductions described 
        in subparagraphs (B), (C), and (G) shall be 33\1/3\ cents for 
        each dollar excluded by subsection (a). The reduction described 
        in subparagraph (F) in any passive activity credit carryover 
        shall be 33\1/3\ cents for each dollar excluded by subsection 
        (a).''
            (B) Subparagraph (B) of section 108(b)(4) is amended by 
        striking ``(C)'' in the text and heading thereof and inserting 
        ``(D)''.
            (C) Subparagraph (C) of section 108(b)(4) is amended by 
        striking ``(E)'' in the text and heading thereof and inserting 
        ``(G)''.
            (D) Subparagraph (B) of section 108(g)(3) is amended--
                (i) by striking ``subparagraphs (A), (B), (C), and (E)'' 
            and inserting ``subparagraphs (A), (B), (C), (D), (F), and 
            (G)'',
                (ii) by striking ``subparagraphs (B) and (E)'' and 
            inserting ``subparagraphs (B), (C), and (G)'', and
                (iii) by inserting before the period at the end the 
            following: ``and the attribute described in subparagraph (F) 
            of subsection (b)(2) to the extent attributable to any 
            passive activity credit carryover''.
        (4) Effective date.--The amendments made by this subsection 
    shall apply to discharges of indebtedness in taxable years beginning 
    after December 31, 1993.

SEC. 13227. LIMITATION ON SECTION 936 CREDIT.

    (a) General Rule.--Subsection (a) of section 936 (relating to Puerto 
Rico and possession tax credit) is amended--
        (1) by striking ``as provided in paragraph (3)'' in paragraph 
    (1) and inserting ``as otherwise provided in this section''; and
        (2) by adding at the end thereof the following new paragraph:
        ``(4) Limitations on credit for active business income.--
            ``(A) In general.--The amount of the credit determined under 
        paragraph (1) for any taxable year with respect to income 
        referred to in subparagraph (A) thereof shall not exceed the sum 
        of the following amounts:
                ``(i) 60 percent of the sum of--

                    ``(I) the aggregate amount of the possession 
                corporation's qualified possession wages for such 
                taxable year, plus
                    ``(II) the allocable employee fringe benefit 
                expenses of the possession corporation for the taxable 
                year.

                ``(ii) The sum of--

                    ``(I) 15 percent of the depreciation allowances for 
                the taxable year with respect to short-life qualified 
                tangible property,
                    ``(II) 40 percent of the depreciation allowances for 
                the taxable year with respect to medium-life qualified 
                tangible property, and
                    ``(III) 65 percent of the depreciation allowances 
                for the taxable year with respect to long-life qualified 
                tangible property.

                ``(iii) If the possession corporation does not have an 
            election to use the method described in subsection 
            (h)(5)(C)(ii) (relating to profit split) in effect for the 
            taxable year, the amount of qualified possession income 
            taxes for the taxable year allocable to nonsheltered income.
            ``(B) Election to take reduced credit.--
                ``(i) In general.--If an election under this 
            subparagraph applies to a possession corporation for any 
            taxable year--

                    ``(I) subparagraph (A), and the provisions of 
                subsection (i), shall not apply to such possession 
                corporation for such taxable year, and
                    ``(II) the credit determined under paragraph (1) for 
                such taxable year with respect to income referred to in 
                subparagraph (A) thereof shall be the applicable 
                percentage of the credit which would otherwise have been 
                determined under such paragraph with respect to such 
                income.

            Notwithstanding subclause (I), a possession corporation to 
            which an election under this subparagraph applies shall be 
            entitled to the benefits of subsection (i)(3)(B) for taxes 
            allocable (on a pro rata basis) to taxable income the tax on 
            which is not offset by reason of this subparagraph.
                ``(ii) Applicable percentage.--The term `applicable 
            percentage' means the percentage determined in accordance 
            with the following table:

                 ``In the case of taxable
                                                               The      
                   years beginning in:
                                                          percentage is:
                   1994.................................


                                                                 605    

                   1995.................................


                                                                 555    

                   1996.................................


                                                                 505    

                   1997.................................


                                                                 455    

                   1998 and thereafter..................


                                                                 40.    

                ``(iii) Election.--

                    ``(I) In general.--An election under this 
                subparagraph by any possession corporation may be made 
                only for the corporation's first taxable year beginning 
                after December 31, 1993, for which it is a possession 
                corporation.
                    ``(II) Period of election.--An election under this 
                subparagraph shall apply to the taxable year for which 
                made and all subsequent taxable years unless revoked.
                    ``(III) Affiliated groups.--If, for any taxable 
                year, an election is not in effect for any possession 
                corporation which is a member of an affiliated group, 
                any election under this subparagraph for any other 
                member of such group is revoked for such taxable year 
                and all subsequent taxable years. For purposes of this 
                subclause, members of an affiliated group shall be 
                determined without regard to the exceptions contained in 
                section 1504(b) and as if the constructive ownership 
                rules of section 1563(e) applied for purposes of section 
                1504(a). The Secretary may prescribe regulations to 
                prevent the avoidance of this subclause through 
                deconsolidation or otherwise.

            ``(C) Cross reference.--
          ``For definitions and special rules applicable to this 
        paragraph, see subsection (i).''

    (b) Definitions and Special Rules.--Section 936 is amended by adding 
at the end thereof the following new subsection:
    ``(i) Definitions and Special Rules Relating to Limitations of 
Subsection (a)(4).--
        ``(1) Qualified possession wages.--For purposes of this 
    section--
            ``(A) In general.--The term `qualified possession wages' 
        means wages paid or incurred by the possession corporation 
        during the taxable year in connection with the active conduct of 
        a trade or business within a possession of the United States to 
        any employee for services performed in such possession, but only 
        if such services are performed while the principal place of 
        employment of such employee is within such possession.
            ``(B) Limitation on amount of wages taken into account.--
                ``(i) In general.--The amount of wages which may be 
            taken into account under subparagraph (A) with respect to 
            any employee for any taxable year shall not exceed 85 
            percent of the contribution and benefit base determined 
            under section 230 of the Social Security Act for the 
            calendar year in which such taxable year begins.
                ``(ii) Treatment of part-time employees, etc.--If--

                    ``(I) any employee is not employed by the possession 
                corporation on a substantially full-time basis at all 
                times during the taxable year, or

                    ``(II) the principal place of employment of any 
                employee with the possession corporation is not within a 
                possession at all times during the taxable year,

            the limitation applicable under clause (i) with respect to 
            such employee shall be the appropriate portion (as 
            determined by the Secretary) of the limitation which would 
            otherwise be in effect under clause (i).
            ``(C) Treatment of certain employees.--The term `qualified 
        possession wages' shall not include any wages paid to employees 
        who are assigned by the employer to perform services for another 
        person, unless the principal trade or business of the employer 
        is to make employees available for temporary periods to other 
        persons in return for compensation. All possession corporations 
        treated as 1 corporation under paragraph (5) shall be treated as 
        1 employer for purposes of the preceding sentence.
            ``(D) Wages.--
                ``(i) In general.--Except as provided in clause (ii), 
            the term `wages' has the meaning given to such term by 
            subsection (b) of section 3306 (determined without regard to 
            any dollar limitation contained in such section). For 
            purposes of the preceding sentence, such subsection (b) 
            shall be applied as if the term `United States' included all 
            possessions of the United States.
                ``(ii) Special rule for agricultural labor and railway 
            labor.--In any case to which subparagraph (A) or (B) of 
            paragraph (1) of section 51(h) applies, the term `wages' has 
            the meaning given to such term by section 51(h)(2).
        ``(2) Allocable employee fringe benefit expenses.--
            ``(A) In general.--The allocable employee fringe benefit 
        expenses of any possession corporation for any taxable year is 
        an amount which bears the same ratio to the amount determined 
        under subparagraph (B) for such taxable year as--
                ``(i) the aggregate amount of the possession 
            corporation's qualified possession wages for such taxable 
            year, bears to
                ``(ii) the aggregate amount of the wages paid or 
            incurred by such possession corporation during such taxable 
            year.
        In no event shall the amount determined under the preceding 
        sentence exceed 15 percent of the amount referred to in clause 
        (i).
            ``(B) Expenses taken into account.--For purposes of 
        subparagraph (A), the amount determined under this subparagraph 
        for any taxable year is the aggregate amount allowable as a 
        deduction under this chapter to the possession corporation for 
        such taxable year with respect to--
                ``(i) employer contributions under a stock bonus, 
            pension, profit-sharing, or annuity plan,
                ``(ii) employer-provided coverage under any accident or 
            health plan for employees, and
                ``(iii) the cost of life or disability insurance 
            provided to employees.
        Any amount treated as wages under paragraph (1)(D) shall not be 
        taken into account under this subparagraph.
        ``(3) Treatment of possession taxes.--
            ``(A) Amount of credit for possession corporations not using 
        profit split.--
                ``(i) In general.--For purposes of subsection 
            (a)(4)(A)(iii), the amount of the qualified possession 
            income taxes for any taxable year allocable to nonsheltered 
            income shall be an amount which bears the same ratio to the 
            possession income taxes for such taxable year as--

                    ``(I) the increase in the tax liability of the 
                possession corporation under this chapter for the 
                taxable year by reason of subsection (a)(4)(A) (without 
                regard to clause (iii) thereof), bears to
                    ``(II) the tax liability of the possession 
                corporation under this chapter for the taxable year 
                determined without regard to the credit allowable under 
                this section.

                ``(ii) Limitation on amount of taxes taken into 
            account.--Possession income taxes shall not be taken into 
            account under clause (i) for any taxable year to the extent 
            that the amount of such taxes exceeds 9 percent of the 
            amount of the taxable income for such taxable year.
            ``(B)  Deduction for possession corporations using profit 
        split.--Notwithstanding subsection (c), if a possession 
        corporation is not described in subsection (a)(4)(A)(iii) for 
        the taxable year, such possession corporation shall be allowed a 
        deduction for such taxable year in an amount which bears the 
        same ratio to the possession income taxes for such taxable year 
        as--
                ``(i) the increase in the tax liability of the 
            possession corporation under this chapter for the taxable 
            year by reason of subsection (a)(4)(A), bears to
                ``(ii) the tax liability of the possession corporation 
            under this chapter for the taxable year determined without 
            regard to the credit allowable under this section.
        In determining the credit under subsection (a) and in applying 
        the preceding sentence, taxable income shall be determined 
        without regard to the preceding sentence.
            ``(C) Possession income taxes.--For purposes of this 
        paragraph, the term `possession income taxes' means any taxes of 
        a possession of the United States which are treated as not being 
        income, war profits, or excess profits taxes paid or accrued to 
        a possession of the United States by reason of subsection (c).
        ``(4) Depreciation rules.--For purposes of this section--
            ``(A) Depreciation allowances.--The term `depreciation 
        allowances' means the depreciation deductions allowable under 
        section 167 to the possession corporation.
            ``(B) Categories of property.--
                ``(i) Qualified tangible property.--The term `qualified 
            tangible property' means any tangible property used by the 
            possession corporation in a possession of the United States 
            in the active conduct of a trade or business within such 
            possession.
                ``(ii) Short-life qualified tangible property.--The term 
            `short-life qualified tangible property' means any qualified 
            tangible property to which section 168 applies and which is 
            3-year property or 5-year property for purposes of such 
            section.
                ``(iii) Medium-life qualified tangible property.--The 
            term `medium-life qualified tangible property' means any 
            qualified tangible property to which section 168 applies and 
            which is 7-year property or 10-year property for purposes of 
            such section.
                ``(iv) Long-life qualified tangible property.--The term 
            `long-life qualified tangible property' means any qualified 
            tangible property to which section 168 applies and which is 
            not described in clause (ii) or (iii).
                ``(v) Transitional rule.--In the case of any qualified 
            tangible property to which section 168 (as in effect on the 
            day before the date of the enactment of the Tax Reform Act 
            of 1986) applies, any reference in this paragraph to section 
            168 shall be treated as a reference to such section as so in 
            effect.
        ``(5) Election to compute credit on consolidated basis.--
            ``(A) In general.--Any affiliated group may elect to treat 
        all possession corporations which would be members of such group 
        but for section 1504(b) (3) or (4) as 1 corporation for purposes 
        of this section. The credit determined under this section with 
        respect to such 1 corporation shall be allocated among such 
        possession corporations in such manner as the Secretary may 
        prescribe.
            ``(B) Election.--An election under subparagraph (A) shall 
        apply to the taxable year for which made and all succeeding 
        taxable years unless revoked with the consent of the Secretary.
        ``(6) Possession corporation.--The term `possession corporation' 
    means a domestic corporation for which the election provided in 
    subsection (a) is in effect.''
    (c) Minimum Tax Treatment.--
        (1) In general.--Subclause (I) of section 56(g)(4)(C)(ii) 
    (relating to special rule for certain dividends) is amended by 
    striking ``sections 936 and 921'' and inserting ``sections 936 
    (including subsections (a)(4) and (i) thereof) and 921''.
        (2) Treatment of foreign taxes.--Clause (iii) of section 
    56(g)(4)(C) is amended by adding at the end thereof the following 
    subclauses:

                    ``(IV) Separate application of foreign tax credit 
                limitations.--In determining the alternative minimum 
                foreign tax credit, section 904(d) shall be applied as 
                if dividends from a corporation eligible for the credit 
                provided by section 936 were a separate category of 
                income referred to in a subparagraph of section 
                904(d)(1).
                    ``(V) Coordination with limitation on 936 credit.--
                Any reference in this clause to a dividend received from 
                a corporation eligible for the credit provided by 
                section 936 shall be treated as a reference to the 
                portion of any such dividend for which the dividends 
                received deduction is disallowed under clause (i) after 
                the application of clause (ii)(I).''

    (d) Conforming Amendment.--Paragraph (4) of section 904(b) is 
amended by inserting before the period at the end thereof the following: 
``(without regard to subsections (a)(4) and (i) thereof)''.
    (e) Increase in Limitation on Cover Over.--Paragraph (1) of section 
7652(f) is amended to read as follows:
        ``(1) $10.50 ($11.30 in the case of distilled spirits brought 
    into the United States during the 5-year period beginning on October 
    1, 1993), or.''
    (f) Effective Date.--The amendments made by this section shall apply 
to taxable years beginning after December 31, 1993; except that the 
amendment made by subsection (e) shall take effect on October 1, 1993.
SEC. 13228. MODIFICATION TO LIMITATION ON DEDUCTION FOR CERTAIN 
INTEREST.
    (a) General Rule.--Paragraph (3) of section 163(j) (defining 
disqualified interest) is amended to read as follows:
        ``(3) Disqualified interest.--For purposes of this subsection, 
    the term `disqualified interest' means--
            ``(A) any interest paid or accrued by the taxpayer (directly 
        or indirectly) to a related person if no tax is imposed by this 
        subtitle with respect to such interest, and
            ``(B) any interest paid or accrued by the taxpayer with 
        respect to any indebtedness to a person who is not a related 
        person if--
                ``(i) there is a disqualified guarantee of such 
            indebtedness, and
                ``(ii) no gross basis tax is imposed by this subtitle 
            with respect to such interest.''
    (b) Definitions.--Paragraph (6) of section 163(j) is amended by 
adding at the end thereof the following new subparagraphs:
            ``(D) Disqualified guarantee.--
                ``(i) In general.--Except as provided in clause (ii), 
            the term `disqualified guarantee' means any guarantee by a 
            related person which is--

                    ``(I) an organization exempt from taxation under 
                this subtitle, or
                    ``(II) a foreign person.

                ``(ii) Exceptions.--The term `disqualified guarantee' 
            shall not include a guarantee--

                    ``(I) in any circumstances identified by the 
                Secretary by regulation, where the interest on the 
                indebtedness would have been subject to a net basis tax 
                if the interest had been paid to the guarantor, or
                    ``(II) if the taxpayer owns a controlling interest 
                in the guarantor.

            For purposes of subclause (II), except as provided in 
            regulations, the term `a controlling interest' means direct 
            or indirect ownership of at least 80 percent of the total 
            voting power and value of all classes of stock of a 
            corporation, or 80 percent of the profit and capital 
            interests in any other entity. For purposes of the preceding 
            sentence, the rules of paragraphs (1) and (5) of section 
            267(c) shall apply; except that such rules shall also apply 
            to interest in entities other than corporations.
                ``(iii) Guarantee.--Except as provided in regulations, 
            the term `guarantee' includes any arrangement under which a 
            person (directly or indirectly through an entity or 
            otherwise) assures, on a conditional or unconditional basis, 
            the payment of another person's obligation under any 
            indebtedness.
            ``(E) Gross basis and net basis taxation.--
                ``(i) Gross basis tax.--The term `gross basis tax' means 
            any tax imposed by this subtitle which is determined by 
            reference to the gross amount of any item of income without 
            any reduction for any deduction allowed by this subtitle.
                ``(ii) Net basis tax.--The term `net basis tax' means 
            any tax imposed by this subtitle which is not a gross basis 
            tax.''
    (c) Conforming Amendments.--
        (1) Subparagraph (B) of section 163(j)(5) is amended by striking 
    ``to a related person''.
        (2) The subsection heading for subsection (j) of section 163 is 
    amended to read as follows:
    ``(j) Limitation on Deduction for Interest on Certain 
Indebtedness.--''.
    (d) Effective Date.--The amendments made by this section shall apply 
to interest paid or accrued in taxable years beginning after December 
31, 1993.

                    PART III--FOREIGN TAX PROVISIONS

 Subpart A--Current Taxation of Certain Earnings of Controlled Foreign 
                              Corporations

SEC. 13231. EARNINGS INVESTED IN EXCESS PASSIVE ASSETS.

    (a) General Rule.--Paragraph (1) of section 951(a) (relating to 
amounts included in gross income of United States shareholders) is 
amended by striking ``and'' at the end of subparagraph (A), by striking 
the period at the end of subparagraph (B) and inserting ``; and'', and 
by adding at the end thereof the following new subparagraph:
            ``(C) the amount determined under section 956A with respect 
        to such shareholder for such year (but only to the extent not 
        excluded from gross income under section 959(a)(3)).''
    (b) Amount of Inclusion.--Subpart F of part III of subchapter N of 
chapter 1 is amended by inserting after section 956 the following new 
section:

``SEC. 956A. EARNINGS INVESTED IN EXCESS PASSIVE ASSETS.

    ``(a) General Rule.--In the case of any controlled foreign 
corporation, the amount determined under this section with respect to 
any United States shareholder for any taxable year is the lesser of--
        ``(1) the excess (if any) of--
            ``(A) such shareholder's pro rata share of the amount of the 
        controlled foreign corporation's excess passive assets for such 
        taxable year, over
            ``(B) the amount of earnings and profits described in 
        section 959(c)(1)(B) with respect to such shareholder, or
        ``(2) such shareholder's pro rata share of the applicable 
    earnings of such controlled foreign corporation determined after the 
    application of section 951(a)(1)(B).
    ``(b) Applicable Earnings.--For purposes of this section, the term 
`applicable earnings' means, with respect to any controlled foreign 
corporation, the sum of--
        ``(1) the amount referred to in section 316(a)(1) to the extent 
    such amount was accumulated in taxable years beginning after 
    September 30, 1993, and
        ``(2) the amount referred to in section 316(a)(2),
but reduced by distributions made during the taxable year and reduced by 
the earnings and profits described in section 959(c)(1) to the extent 
that the earnings and profits so described were accumulated in taxable 
years beginning after September 30, 1993.
    ``(c) Excess Passive Assets.--For purposes of this section--
        ``(1) In general.--The excess passive assets of any controlled 
    foreign corporation for any taxable year is the excess (if any) of--
            ``(A) the average of the amounts of passive assets held by 
        such corporation as of the close of each quarter of such taxable 
        year, over
            ``(B) 25 percent of the average of the amounts of total 
        assets held by such corporation as of the close of each quarter 
        of such taxable year.
    For purposes of the preceding sentence, the amount taken into 
    account with respect to any asset shall be its adjusted basis as 
    determined for purposes of computing earnings and profits.
        ``(2) Passive asset.--
            ``(A) In general.--Except as otherwise provided in this 
        section, the term `passive asset' means any asset held by the 
        controlled foreign corporation which produces passive income (as 
        defined in section 1296(b)) or is held for the production of 
        such income.
            ``(B) Coordination with section 956.--The term `passive 
        asset' shall not include any United States property (as defined 
        in section 956).
        ``(3)Certain rules to apply.--For purposes of this subsection, 
    the rules of the following provisions shall apply:
            ``(A) Section 1296(c) (relating to look-thru rules).
            ``(B) Section 1297(d) (relating to leasing rules).
            ``(C) Section 1297(e) (relating to intangible property).
    ``(d) Treatment of Certain Groups of Controlled Foreign 
Corporations.--
        ``(1) In general.--For purposes of applying subsection (c)--
            ``(A) all controlled foreign corporations which are members 
        of the same CFC group shall be treated as 1 controlled foreign 
        corporation, and
            ``(B) the amount of the excess passive assets determined 
        with respect to such 1 corporation shall be allocated among the 
        controlled foreign corporations which are members of such group 
        in proportion to their respective amounts of applicable 
        earnings.
        ``(2) CFC group.--For purposes of paragraph (1), the term `CFC 
    group' means 1 or more chains of controlled foreign corporations 
    connected through stock ownership with a top tier corporation which 
    is a controlled foreign corporation, but only if--
            ``(A) the top tier corporation owns directly more than 50 
        percent (by vote or value) of the stock of at least 1 of the 
        other controlled foreign corporations, and
            ``(B) more than 50 percent (by vote or value) of the stock 
        of each of the controlled foreign corporations (other than the 
        top tier corporation) is owned (directly or indirectly) by one 
        or more other members of the group.
    ``(e) Special Rule Where Corporation Ceases To Be Controlled Foreign 
Corporation During Taxable Year.--If any foreign corporation ceases to 
be a controlled foreign corporation during any taxable year--
        ``(1) the determination of any United States shareholder's pro 
    rata share shall be made on the basis of stock owned (within the 
    meaning of section 958(a)) by such shareholder on the last day 
    during the taxable year on which the foreign corporation is a 
    controlled foreign corporation,
        ``(2) the amount of such corporation's excess passive assets for 
    such taxable year shall be determined by only taking into account 
    quarters ending on or before such last day, and
        ``(3) in determining applicable earnings, the amount taken into 
    account by reason of being described in paragraph (2) of section 
    316(a) shall be the portion of the amount so described which is 
    allocable (on a pro rata basis) to the part of such year during 
    which the corporation is a controlled foreign corporation.
    ``(f) Regulations.--The Secretary shall prescribe such regulations 
as may be necessary to carry out the purposes of this section, including 
regulations to prevent the avoidance of the provisions of this section 
through reorganizations or otherwise.''
    (c) Previously Taxed Income Rules.--
        (1) In general.--Subsection (a) of section 959 (relating to 
    exclusion from gross income of previously taxed earnings and 
    profits) is amended by striking ``or'' at the end of paragraph (1), 
    by adding ``or'' at the end of paragraph (2), and by inserting after 
    paragraph (2) the following new paragraph:
        ``(3) such amounts would, but for this subsection, be included 
    under section 951(a)(1)(C) in the gross income of,''.
        (2) Allocation rules.--
            (A) Subsection (a) of section 959 is amended by adding at 
        the end thereof the following new sentence: ``The rules of 
        subsection (c) shall apply for purposes of paragraph (1) of this 
        subsection and the rules of subsection (f) shall apply for 
        purposes of paragraphs (2) and (3) of this subsection.''.
            (B) Section 959 is amended by adding at the end thereof the 
        following new subsection:
    ``(f) Allocation Rules for Certain Inclusions.--
        ``(1) In general.--For purposes of this section--
            ``(A) amounts that would be included under subparagraph (B) 
        of section 951(a)(1) (determined without regard to this section) 
        shall be treated as attributable first to earnings described in 
        subsection (c)(2), and then to earnings described in subsection 
        (c)(3), and
            ``(B) amounts that would be included under subparagraph (C) 
        of section 951(a)(1) (determined without regard to this section) 
        shall be treated as attributable first to earnings described in 
        subsection (c)(2) to the extent the earnings so described were 
        accumulated in taxable years beginning after September 30, 1993, 
        and then to earnings described in subsection (c)(3).
        ``(2) Treatment of distributions.--In applying this section, 
    actual distributions shall be taken into account before amounts that 
    would be included under subparagraphs (B) and (C) of section 
    951(a)(1) (determined without regard to this section).''
            (C) Paragraph (1) of section 959(c) is amended to read as 
        follows:
        ``(1) first to the aggregate of--
            ``(A) earnings and profits attributable to amounts included 
        in gross income under section 951(a)(1)(B) (or which would have 
        been included except for subsection (a)(2) of this section), and
            ``(B) earnings and profits attributable to amounts included 
        in gross income under section 951(a)(1)(C) (or which would have 
        been included except for subsection (a)(3) of this section),
    with any distribution being allocated between earnings and profits 
    described in subparagraph (A) and earnings and profits described in 
    subparagraph (B) proportionately on the basis of the respective 
    amounts of such earnings and profits,''.
        (3) Coordination with pfic inclusions.--Subsection (c) of 
    section 1293 is amended by adding at the end thereof the following 
    new sentence: ``If the passive foreign investment company is a 
    controlled foreign corporation (as defined in section 957(a)), the 
    preceding sentence shall not apply to any United States shareholder 
    (as defined in section 951(b)) in such corporation, and, in applying 
    section 959 to any such shareholder, any inclusion under this 
    section shall be treated as an inclusion under section 
    951(a)(1)(A).''.
        (4) Conforming amendments.--
            (A) Subsections (a) and (b) of section 959 are each amended 
        by striking ``earnings and profits for a taxable year'' and 
        inserting ``earnings and profits''.
            (B) Paragraph (2) of section 959(c) is amended to read as 
        follows:
        ``(2) then to earnings and profits attributable to amounts 
    included in gross income under section 951(a)(1)(A) (but reduced by 
    amounts not included under subparagraph (B) or (C) of section 
    951(a)(1) because of the exclusions in paragraphs (2) and (3) of 
    subsection (a) of this section), and''
            (C) Subsection (b) of section 989 is amended by striking 
        ``section 951(a)(1)(B)'' and inserting ``subparagraph (B) or (C) 
        of section 951(a)(1)''.
    (d) Modifications to Passive Foreign Investment Company Rules.--
        (1) Adjusted basis used in certain determinations.--Subsection 
    (a) of section 1296 is amended by striking the material following 
    paragraph (2) and inserting the following:
``In the case of a controlled foreign corporation (or any other foreign 
corporation if such corporation so elects), the determination under 
paragraph (2) shall be based on the adjusted bases (as determined for 
purposes of computing earnings and profits) of its assets in lieu of 
their value. Such an election, once made, may be revoked only with the 
consent of the Secretary.''
        (2) Treatment of certain subpart f inclusions.--Subsection (b) 
    of section 1297 is amended by adding at the end thereof the 
    following new paragraph:
        ``(9) Treatment of certain subpart f inclusions.--Any amount 
    included in gross income under subparagraph (B) or (C) of section 
    951(a)(1) shall be treated as a distribution received with respect 
    to the stock.''
        (3) Treatment of certain dealers in securities.--Subsection (b) 
    of section 1296 is amended by adding at the end thereof the 
    following new paragraph:
        ``(3) Treatment of certain dealers in securities.--
            ``(A) In general.--In the case of any foreign corporation 
        which is a controlled foreign corporation (as defined in section 
        957(a)), the term `passive income' does not include any income 
        derived in the active conduct of a securities business by such 
        corporation if such corporation is registered as a securities 
        broker or dealer under section 15(a) of the Securities Exchange 
        Act of 1934 or is registered as a Government securities broker 
        or dealer under section 15C(a) of such Act. To the extent 
        provided in regulations, such term shall not include any income 
        derived in the active conduct of a securities business by a 
        controlled foreign corporation which is not so registered.
            ``(B) Application of look-thru rules.--For purposes of 
        paragraph (2)(C), rules similar to the rules of subparagraph (A) 
        of this paragraph shall apply in determining whether any income 
        of a related person (whether or not a corporation) is passive 
        income.
            ``(C) Limitation.--The preceding provisions of this 
        paragraph shall only apply in the case of persons who are United 
        States shareholders (as defined in section 951(b)) in the 
        controlled foreign corporation.''
        (4) Leasing and intangible asset rules.--Section 1297 is amended 
    by redesignating subsection (d) as subsection (f) and by inserting 
    after subsection (c) the following new subsections:
    ``(d) Treatment of Certain Leased Property.--For purposes of this 
part--
        ``(1) In general.--Any tangible personal property with respect 
    to which a foreign corporation is the lessee under a lease with a 
    term of at least 12 months shall be treated as an asset actually 
    held by such corporation.
        ``(2) Determination of adjusted basis.--
            ``(A) In general.--The adjusted basis of any asset to which 
        paragraph (1) applies shall be the unamortized portion (as 
        determined under regulations prescribed by the Secretary) of the 
        present value of the payments under the lease for the use of 
        such property.
            ``(B) Present value.--For purposes of subparagraph (A), the 
        present value of payments described in subparagraph (A) shall be 
        determined in the manner provided in regulations prescribed by 
        the Secretary--
                ``(i) as of the beginning of the lease term, and
                ``(ii) except as provided in such regulations, by using 
            a discount rate equal to the applicable Federal rate 
            determined under section 1274(d)--

                    ``(I) by substituting the lease term for the term of 
                the debt instrument, and
                    ``(II) without regard to paragraph (2) or (3) 
                thereof.

        ``(3) Exceptions.--This subsection shall not apply in any case 
    where--
            ``(A) the lessor is a related person (as defined in section 
        954(d)(3)) with respect to the foreign corporation, or
            ``(B) a principal purpose of leasing the property was to 
        avoid the provisions of this part or section 956A.
    ``(e)Special Rules For Certain Intangibles.--
        ``(1) Research expenditures.--The adjusted basis of the total 
    assets of a controlled foreign corporation shall be increased by the 
    research or experimental expenditures (within the meaning of section 
    174) paid or incurred by such foreign corporation during the taxable 
    year and the preceding 2 taxable years. Any expenditure otherwise 
    taken into account under the preceding sentence shall be reduced by 
    the amount of any reimbursement received by the controlled foreign 
    corporation with respect to such expenditure.
        ``(2) Certain licensed intangibles.--
            ``(A) In general.--In the case of any intangible property 
        (as defined in section 936(h)(3)(B)) with respect to which a 
        controlled foreign corporation is a licensee and which is used 
        by such foreign corporation in the active conduct of a trade or 
        business, the adjusted basis of the total assets of such foreign 
        corporation shall be increased by an amount equal to 300 percent 
        of the payments made during the taxable year by such foreign 
        corporation for the use of such intangible property.
            ``(B) Exceptions.--Subparagraph (A) shall not apply to--
                ``(i) any payments to a foreign person if such foreign 
            person is a related person (as defined in section 954(d)(3)) 
            with respect to the controlled foreign corporation, and
                ``(ii) any payments under a license if a principal 
            purpose of entering into such license was to avoid the 
            provisons of this part or section 956A.
        ``(3) Controlled foreign corporation.--For purposes of this 
    subsection, the term `controlled foreign corporation' has the 
    meaning given such term by section 957(a).''
    (e) Effective Date.--The amendments made by this section shall apply 
to taxable years of foreign corporations beginning after September 30, 
1993, and to taxable years of United States shareholders in which or 
with which such taxable years of foreign corporations end.
SEC. 13232. MODIFICATION TO TAXATION OF INVESTMENT IN UNITED STATES 
PROPERTY.
    (a) General Rule.--Section 956 (relating to investment of earnings 
in United States property) is amended--
        (1) by redesignating subsections (b) and (c) as subsections (c) 
    and (d), respectively, and
        (2) by striking subsection (a) and inserting the following:
    ``(a) General Rule.--In the case of any controlled foreign 
corporation, the amount determined under this section with respect to 
any United States shareholder for any taxable year is the lesser of--
        ``(1) the excess (if any) of--
            ``(A) such shareholder's pro rata share of the average of 
        the amounts of United States property held (directly or 
        indirectly) by the controlled foreign corporation as of the 
        close of each quarter of such taxable year, over
            ``(B) the amount of earnings and profits described in 
        section 959(c)(1)(A) with respect to such shareholder, or
        ``(2) such shareholder's pro rata share of the applicable 
    earnings of such controlled foreign corporation.
The amount taken into account under paragraph (1) with respect to any 
property shall be its adjusted basis as determined for purposes of 
computing earnings and profits, reduced by any liability to which the 
property is subject.
    ``(b) Special Rules.--
        ``(1) Applicable earnings.--For purposes of this section, the 
    term `applicable earnings' has the meaning given to such term by 
    section 956A(b), except that the provisions of such section 
    excluding earnings and profits accumulated in taxable years 
    beginning before October 1, 1993, shall be disregarded.
        ``(2) Special rule for u.s. property acquired before corporation 
    is a controlled foreign corporation.--In applying subsection (a) to 
    any taxable year, there shall be disregarded any item of United 
    States property which was acquired by the controlled foreign 
    corporation before the first day on which such corporation was 
    treated as a controlled foreign corporation. The aggregate amount of 
    property disregarded under the preceding sentence shall not exceed 
    the portion of the applicable earnings of such controlled foreign 
    corporation which were accumulated during periods before such first 
    day.
        ``(3) Special rule where corporation ceases to be controlled 
    foreign corporation.--Rules similar to the rules of section 956A(e) 
    shall apply for purposes of this section.''
    (b) Regulatory Authority.--Section 956 is amended by adding at the 
end thereof the following new subsection:
    ``(e) Regulations.--The Secretary shall prescribe such regulations 
as may be necessary to carry out the purposes of this section, including 
regulations to prevent the avoidance of the provisons of this section 
through reorganizations or otherwise.''
    (c) Conforming Amendments.--
        (1) Subparagraph (B) of section 951(a)(1) is amended to read as 
    follows:
            ``(B) the amount determined under section 956 with respect 
        to such shareholder for such year (but only to the extent not 
        excluded from gross income under section 959(a)(2)); and''
        (2) Subsection (a) of section 951 is amended by striking 
    paragraph (4).
    (d) Effective Date.--The amendments made by this section shall apply 
to taxable years of controlled foreign corporations beginning after 
September 30, 1993, and to taxable years of United States shareholders 
in which or with which such taxable years of controlled foreign 
corporations end.

SEC. 13233. OTHER MODIFICATIONS TO SUBPART F.

    (a) Same Country Exception Not To Apply to Certain Dividends.--
        (1) In general.--Paragraph (3) of section 954(c) (relating to 
    certain income received from related persons) is amended by adding 
    at the end thereof the following new subparagraph:
            ``(C) Exception for certain dividends.--Subparagraph (A)(i) 
        shall not apply to any dividend with respect to any stock which 
        is attributable to earnings and profits of the distributing 
        corporation accumulated during any period during which the 
        person receiving such dividend did not hold such stock either 
        directly, or indirectly through a chain of one or more 
        subsidiaries each of which meets the requirements of 
        subparagraph (A)(i).''
        (2) Effective date.--The amendment made by paragraph (1) shall 
    apply to taxable years of controlled foreign corporations beginning 
    after September 30, 1993, and to taxable years of United States 
    shareholders in which or with which such taxable years of controlled 
    foreign corporations end.
    (b) Amendments to Section 960(b).--
        (1) In general.--Subsection (b) of section 960 is amended--
            (A) by redesignating paragraphs (3) and (4) as paragraphs 
        (4) and (5), respectively, and
            (B) by striking paragraphs (1) and (2) and inserting the 
        following new paragraphs:
        ``(1) Increase in section 904 limitation.--In the case of any 
    taxpayer who--
            ``(A) either (i) chose to have the benefits of subpart A of 
        this part for a taxable year beginning after September 30, 1993, 
        in which he was required under section 951(a) to include any 
        amount in his gross income, or (ii) did not pay or accrue for 
        such taxable year any income, war profits, or excess profits 
        taxes to any foreign country or to any possession of the United 
        States,
            ``(B) chooses to have the benefits of subpart A of this part 
        for any taxable year in which he receives 1 or more 
        distributions or amounts which are excludable from gross income 
        under section 959(a) and which are attributable to amounts 
        included in his gross income for taxable years referred to in 
        subparagraph (A), and
            ``(C) for the taxable year in which such distributions or 
        amounts are received, pays, or is deemed to have paid, or 
        accrues income, war profits, or excess profits taxes to a 
        foreign country or to any possession of the United States with 
        respect to such distributions or amounts,
    the limitation under section 904 for the taxable year in which such 
    distributions or amounts are received shall be increased by the 
    lesser of the amount of such taxes paid, or deemed paid, or accrued 
    with respect to such distributions or amounts or the amount in the 
    excess limitation account as of the beginning of such taxable year.
        ``(2) Excess limitation account.--
            ``(A) Establishment of account.--Each taxpayer meeting the 
        requirements of paragraph (1)(A) shall establish an excess 
        limitation account. The opening balance of such account shall be 
        zero.
            ``(B) Increases in account.--For each taxable year beginning 
        after September 30, 1993, the taxpayer shall increase the amount 
        in the excess limitation account by the excess (if any) of--
                ``(i) the amount by which the limitation under section 
            904(a) for such taxable year was increased by reason of the 
            total amount of the inclusions in gross income under section 
            951(a) for such taxable year, over
                ``(ii) the amount of any income, war profits, and excess 
            profits taxes paid, or deemed paid, or accrued to any 
            foreign country or possession of the United States which 
            were allowable as a credit under section 901 for such 
            taxable year and which would not have been allowable but for 
            the inclusions in gross income described in clause (i).
        Proper reductions in the amount added to the account under the 
        preceding sentence for any taxable year shall be made for any 
        increase in the credit allowable under section 901 for such 
        taxable year by reason of a carryback if such increase would not 
        have been allowable but for the inclusions in gross income 
        described in clause (i).
            ``(C) Decreases in account.--For each taxable year beginning 
        after September 30, 1993, for which the limitation under section 
        904 was increased under paragraph (1), the taxpayer shall reduce 
        the amount in the excess limitation account by the amount of 
        such increase.
        ``(3) Distributions of income previously taxed in years 
    beginning before october 1, 1993.--If the taxpayer receives a 
    distribution or amount in a taxable year beginning after September 
    30, 1993, which is excluded from gross income under section 959(a) 
    and is attributable to any amount included in gross income under 
    section 951(a) for a taxable year beginning before October 1, 1993, 
    the limitation under section 904 for the taxable year in which such 
    amount or distribution is received shall be increased by the amount 
    determined under this subsection as in effect on the day before the 
    date of the enactment of the Revenue Reconcilation Act of 1993.''
        (2) Effective date.--The amendment made by paragraph (1) shall 
    apply to taxable years beginning after September 30, 1993.

     Subpart B--Allocation of Research and Experimental Expenditures

SEC. 13234. ALLOCATION OF RESEARCH AND EXPERIMENTAL EXPENDITURES.
    (a) General Rule.--Subparagraph (B) of section 864(f)(1) (relating 
to allocation of research and experimental expenditures) is amended by 
striking ``64 percent'' each place it appears and inserting ``50 
percent''.
    (b) Conforming Amendments.--
        (1) Subsection (f) of section 864 is amended by striking 
    paragraph (5) and inserting the following new paragraphs:
        ``(5) Regulations.--The Secretary shall prescribe such 
    regulations as may be appropriate to carry out the purposes of this 
    subsection, including regulations relating to the determination of 
    whether any expenses are attributable to activities conducted in the 
    United States or outside the United States and regulations providing 
    such adjustments to the provisions of this subsection as may be 
    appropriate in the case of cost-sharing arrangements and contract 
    research.
        ``(6) Applicability.--This subsection shall apply to the 
    taxpayer's first taxable year (beginning on or before August 1, 
    1994) following the taxpayer's last taxable year to which Revenue 
    Procedure 92-56 applies or would apply if the taxpayer elected the 
    benefits of such Revenue Procedure.''
        (2) Subparagraph (D) of section 864(f)(4) is amended by striking 
    ``subparagraph (C)'' and inserting ``subparagraph (B) or (C)''.

                       Subpart C--Other Provisions

SEC. 13235. REPEAL OF CERTAIN EXCEPTIONS FOR WORKING CAPITAL.
    (a) Provisions Relating to Oil and Gas Income.--
        (1) Amendments to section 907.--
            (A) Paragraph (1) of section 907(c) is amended by adding at 
        the end thereof the following new flush sentence:
``Such term does not include any dividend or interest income which is 
passive income (as defined in section 904(d)(2)(A)).''.
            (B) Paragraph (2) of section 907(c) is amended by adding at 
        the end thereof the following new flush sentence:
``Such term does not include any dividend or interest income which is 
passive income (as defined in section 904(d)(2)(A)).''.
        (2) Separate application of foreign tax credit.--Clause (iii) of 
    section 904(d)(2)(A) is amended by inserting ``and'' at the end of 
    subclause (II), by striking ``, and'' at the end of subclause (III) 
    and inserting a period, and by striking subclause (IV).
        (3) Treatment under subpart f.--
            (A) Paragraph (1) of section 954(g) is amended by adding at 
        the end thereof the following new flush sentence:
``Such term shall not include any foreign personal holding company 
income (as defined in subsection (c)).''.
            (B) Paragraph (8) of section 954(b) is amended by striking 
        ``(1),''.
    (b) Treatment of Shipping Income.--Subsection (f) of section 954 is 
amended by adding at the end thereof the following new sentence: 
``Except as provided in paragraph (1), such term shall not include any 
dividend or interest income which is foreign personal holding company 
income (as defined in subsection (c)).''.
    (c) Effective Date.--The amendments made by this section shall apply 
to taxable years beginning after December 31, 1992.

SEC. 13236. MODIFICATIONS OF ACCURACY-RELATED PENALTY.

    (a) Threshold Requirement.--Clause (ii) of section 6662(e)(1)(B) 
(relating to substantial valuation misstatement under chapter 1) is 
amended to read as follows:
                ``(ii) the net section 482 transfer price adjustment for 
            the taxable year exceeds the lesser of $5,000,000 or 10 
            percent of the taxpayer's gross receipts.''
    (b) Certain Adjustments Excluded in Determining Threshold.--
Subparagraph (B) of section 6662(e)(3) is amended to read as follows:
            ``(B) Certain adjustments excluded in determining 
        threshold.--For purposes of determining whether the threshold 
        requirements of paragraph (1)(B)(ii) are met, the following 
        shall be excluded:
                ``(i) Any portion of the net increase in taxable income 
            referred to in subparagraph (A) which is attributable to any 
            redetermination of a price if--

                    ``(I) it is established that the taxpayer determined 
                such price in accordance with a specific pricing method 
                set forth in the regulations prescribed under section 
                482 and that the taxpayer's use of such method was 
                reasonable,

                    ``(II) the taxpayer has documentation (which was in 
                existence as of the time of filing the return) which 
                sets forth the determination of such price in accordance 
                with such a method and which establishes that the use of 
                such method was reasonable, and
                    ``(III) the taxpayer provides such documentation to 
                the Secretary within 30 days of a request for such 
                documentation.

                ``(ii) Any portion of the net increase in taxable income 
            referred to in subparagraph (A) which is attributable to a 
            redetermination of price where such price was not determined 
            in accordance with such a specific pricing method if--

                    ``(I) the taxpayer establishes that none of such 
                pricing methods was likely to result in a price that 
                would clearly reflect income, the taxpayer used another 
                pricing method to determine such price, and such other 
                pricing method was likely to result in a price that 
                would clearly reflect income,
                    ``(II) the taxpayer has documentation (which was in 
                existence as of the time of filing the return) which 
                sets forth the determination of such price in accordance 
                with such other method and which establishes that the 
                requirements of subclause (I) were satisfied, and
                    ``(III) the taxpayer provides such documentation to 
                the Secretary within 30 days of request for such 
                documentation.

                ``(iii) Any portion of such net increase which is 
            attributable to any transaction solely between foreign 
            corporations unless, in the case of any such corporations, 
            the treatment of such transaction affects the determination 
            of income from sources within the United States or taxable 
            income effectively connected with the conduct of a trade or 
            business within the United States.''
    (c) Coordination With Reasonable Cause Exception.--Paragraph (3) of 
section 6662(e) is amended by adding at the end thereof the following 
new subparagraph:
            ``(D) Coordination with reasonable cause exception.--For 
        purposes of section 6664(c) the taxpayer shall not be treated as 
        having reasonable cause for any portion of an underpayment 
        attributable to a net section 482 transfer price adjustment 
        unless such taxpayer meets the requirements of clause (i), (ii), 
        or (iii) of subparagraph (B) with respect to such portion.''
    (d) Conforming Amendment.--Clause (iii) of section 6662(h)(2)(A) is 
amended to read as follows:
                ``(iii) in paragraph (1)(B)(ii)--

                    ``(I) `$20,000,000' for `$5,000,000', and
                    ``(II) `20 percent' for `10 percent'.''

    (e) Effective Date.--The amendments made by this section shall apply 
to taxable years beginning after December 31, 1993.
SEC. 13237. DENIAL OF PORTFOLIO INTEREST EXEMPTION FOR CONTINGENT 
INTEREST.
    (a) General Rule.--
        (1) Subsection (h) of section 871 (relating to repeal of tax on 
    interest of nonresident alien individuals received from certain 
    portfolio debt investments) is amended by redesignating paragraphs 
    (4), (5), and (6) as paragraphs (5), (6), and (7), respectively, and 
    by inserting after paragraph (3) the following new paragraph:
        ``(4) Portfolio interest not to include certain contingent 
    interest.--For purposes of this subsection--
            ``(A) In general.--Except as otherwise provided in this 
        paragraph, the term `portfolio interest' shall not include--
                ``(i) any interest if the amount of such interest is 
            determined by reference to--

                    ``(I) any receipts, sales or other cash flow of the 
                debtor or a related person,
                    ``(II) any income or profits of the debtor or a 
                related person,
                    ``(III) any change in value of any property of the 
                debtor or a related person, or
                    ``(IV) any dividend, partnership distributions, or 
                similar payments made by the debtor or a related person, 
                or

                ``(ii) any other type of contingent interest that is 
            identified by the Secretary by regulation, where a denial of 
            the portfolio interest exemption is necessary or appropriate 
            to prevent avoidance of Federal income tax.
            ``(B) Related person.--The term `related person' means any 
        person who is related to the debtor within the meaning of 
        section 267(b) or 707(b)(1), or who is a party to any 
        arrangement undertaken for a purpose of avoiding the application 
        of this paragraph.
            ``(C) Exceptions.--Subparagraph (A)(i) shall not apply to--
                ``(i) any amount of interest solely by reason of the 
            fact that the timing of any interest or principal payment is 
            subject to a contingency,
                ``(ii) any amount of interest solely by reason of the 
            fact that the interest is paid with respect to nonrecourse 
            or limited recourse indebtedness,
                ``(iii) any amount of interest all or substantially all 
            of which is determined by reference to any other amount of 
            interest not described in subparagraph (A) (or by reference 
            to the principal amount of indebtedness on which such other 
            interest is paid),
                ``(iv) any amount of interest solely by reason of the 
            fact that the debtor or a related person enters into a 
            hedging transaction to reduce the risk of interest rate or 
            currency fluctuations with respect to such interest,
                ``(v) any amount of interest determined by reference 
            to--

                    ``(I) changes in the value of property (including 
                stock) that is actively traded (within the meaning of 
                section 1092(d)) other than property described in 
                section 897(c)(1) or (g),
                    ``(II) the yield on property described in subclause 
                (I), other than a debt instrument that pays interest 
                described in subparagraph (A), or stock or other 
                property that represents a beneficial interest in the 
                debtor or a related person, or
                    ``(III) changes in any index of the value of 
                property described in subclause (I) or of the yield on 
                property described in subclause (II), and

                ``(vi) any other type of interest identified by the 
            Secretary by regulation.
            ``(D) Exception for certain existing indebtedness.--
        Subparagraph (A) shall not apply to any interest paid or accrued 
        with respect to any indebtedness with a fixed term--
                ``(i) which was issued on or before April 7, 1993, or
                ``(ii) which was issued after such date pursuant to a 
            written binding contract in effect on such date and at all 
            times thereafter before such indebtedness was issued.''
        (2) Subsection (c) of section 881 is amended by redesignating 
    paragraphs (4), (5), and (6) as paragraphs (5), (6), and (7), 
    respectively, and by inserting after paragraph (3) the following new 
    paragraph:
        ``(4) Portfolio interest not to include certain contingent 
    interest.--For purposes of this subsection, the term `portfolio 
    interest' shall not include any interest which is treated as not 
    being portfolio interest under the rules of section 871(h)(4).''
    (b) Estate Tax Treatment.--Subsection (b) of section 2105 is 
amended--
        (1) by striking ``this subchapter'' in the material preceding 
    paragraph (1) and inserting ``this subchapter, the following shall 
    not be deemed property within the United States'', and
        (2) by striking paragraph (3) and all that follows down through 
    the period at the end thereof and inserting the following:
        ``(3) debt obligations, if, without regard to whether a 
    statement meeting the requirements of section 871(h)(5) has been 
    received, any interest thereon would be eligible for the exemption 
    from tax under section 871(h)(1) were such interest received by the 
    decedent at the time of his death.
Notwithstanding the preceding sentence, if any portion of the interest 
on an obligation referred to in paragraph (3) would not be eligible for 
the exemption referred to in paragraph (3) by reason of section 
871(h)(4) if the interest were received by the decedent at the time of 
his death, then an appropriate portion (as determined in a manner 
prescribed by the Secretary) of the value (as determined for purposes of 
this chapter) of such debt obligation shall be deemed property within 
the United States.''
    (c) Conforming Amendments.--
        (1) Clause (ii) of section 871(h)(2)(B) is amended by striking 
    ``paragraph (4)'' and inserting ``paragraph (5)''.
        (2) Clause (ii) of section 881(c)(2)(B) is amended by striking 
    ``section 871(h)(4)'' and inserting ``section 871(h)(5)''.
        (3) Paragraph (6) of section 881(c) (as redesignated by 
    subsection (a)) is amended by striking ``section 871(h)(5)'' each 
    place it appears and inserting ``section 871(h)(6)''.
        (4) Paragraph (9) of section 1441(c) is amended by striking 
    ``section 871(h)(3)'' and inserting ``section 871(h)(3) or (4)''.
        (5) Subsection (a) of section 1442 is amended--
            (A) by striking ``871(h)(3)'' and inserting ``871(h)(3) or 
        (4)'', and
            (B) by striking ``881(c)(3)'' and inserting ``881(c)(3) or 
        (4)''.
    (d) Effective Date.--The amendments made by this section shall apply 
to interest received after December 31, 1993; except that the amendments 
made by subsection (b) shall apply to the estates of decedents dying 
after December 31, 1993.

SEC. 13238. REGULATIONS DEALING WITH CONDUIT ARRANGEMENTS.

    Section 7701 is amended by redesignating subsection (l) as 
subsection (m) and by inserting after subsection (k) the following new 
subsection:
    ``(l) Regulations Relating to Conduit Arrangements.--The Secretary 
may prescribe regulations recharacterizing any multiple-party financing 
transaction as a transaction directly among any 2 or more of such 
parties where the Secretary determines that such recharacterization is 
appropriate to prevent avoidance of any tax imposed by this title.''

SEC. 13239. TREATMENT OF EXPORT OF CERTAIN SOFTWOOD LOGS.

    (a) Foreign Sales Corporations.--Paragraph (2) of section 927(a) 
(relating to exclusion of certain property) is amended by striking 
``or'' at the end of subparagraph (C), by striking the period at the end 
of subparagraph (D) and inserting ``, or'', and by adding at the end the 
following:
            ``(E) any unprocessed timber which is a softwood.
    For purposes of subparagraph (E), the term `unprocessed timber' 
    means any log, cant, or similar form of timber.''
    (b) Domestic International Sales Corporations.--Paragraph (2) of 
section 993(c) (relating to exclusion of certain property) is amended--
        (1) by striking ``or'' at the end of subparagraph (C), by 
    striking the period at the end of subparagraph (D) and inserting ``, 
    or'', and by adding after subparagraph (D) the following new 
    subparagraph:
            ``(E) any unprocessed timber which is a softwood.'', and
        (2) by adding at the end the following new sentence: ``For 
    purposes of subparagraph (E), the term `unprocessed timber' means 
    any log, cant, or similar form of timber.''
    (c) Source Rule.--Subsection (b) of section 865 (relating to source 
rules for personal property sales) is amended by adding at the end the 
following: ``Notwithstanding the preceding sentence, any income from the 
sale of any unprocessed timber which is a softwood and was cut from an 
area in the United States shall be sourced in the United States and the 
rules of sections 862(a)(6) and 863(b) shall not apply to any such 
income. For purposes of the preceding sentence, the term `unprocessed 
timber' means any log, cant, or similar form of timber.''
    (d) Elimination of Deferral.--Subsection (d) of section 954 is 
amended by adding at the end the following new paragraph:
        ``(4) Special rule for certain timber products.--For purposes of 
    subsection (a)(2), the term `foreign base company sales income' 
    includes any income (whether in the form of profits, commissions, 
    fees, or otherwise) derived in connection with--
            ``(A) the sale of any unprocessed timber referred to in 
        section 865(b), or
            ``(B) the milling of any such timber outside the United 
        States.
    Subpart G shall not apply to any amount treated as subpart F income 
    by reason of this paragraph.''
    (e) Effective Date.--The amendments made by this section shall apply 
to sales, exchanges, or other dispositions after the date of the 
enactment of this Act.

                PART IV--TRANSPORTATION FUELS PROVISIONS

                   Subpart A--Transportation Fuels Tax

SEC. 13241. TRANSPORTATION FUELS TAX.

    (a) Gasoline.--Clause (iii) of section 4081(a)(2)(B) (relating to 
rates of tax) is amended to read as follows:
                ``(iii) the deficit reduction rate is 6.8 cents per 
            gallon.''
    (b) Diesel Fuel and Noncommercial Aviation Fuel.--
        (1) Diesel fuel.--Paragraph (4) of section 4091(b) (relating to 
    rate of tax) is amended by striking ``2.5 cents'' and inserting 
    ``6.8 cents''.
        (2) Aviation fuel.--
            (A) Gasoline in noncommercial aviation.--Paragraph (3) of 
        section 4041(c) is amended to read as follows:
        ``(3) Rate of tax.--The rate of tax imposed by paragraph (2) on 
    any gasoline is 1 cent per gallon.''
            (B) Fuel other than gasoline.--
                (i) Clause (ii) of section 4091(b)(1)(A) is amended by 
            inserting ``and the aviation fuel deficit reduction rate'' 
            after ``financing rate''.
                (ii) Subsection (b) of section 4091 is amended by 
            redesignating paragraph (6) as paragraph (7) and by 
            inserting after paragraph (5) the following new paragraph:
        ``(6) Aviation fuel deficit reduction rate.--For purposes of 
    paragraph (1), the aviation fuel deficit reduction rate is 4.3 cents 
    per gallon.''
                (iii) Paragraph (1) of section 4041(c) is amended--

                    (I) by striking ``of 17.5 cents a gallon'', and
                    (II) by inserting before the last sentence the 
                following new sentence:

    ``The rate of the tax imposed by this paragraph shall be the sum of 
    the Airport and Airway Trust Fund financing rate and the aviation 
    fuel deficit reduction rate in effect under section 4091 at the time 
    of such sale or use.''
    (c) Certain Alcohol Fuels.--Section 4041(m)(1)(A) is amended to read 
as follows:
            ``(A) under subsection (a)(2)--
                ``(i) the Highway Trust Fund financing rate shall be 
            5.75 cents per gallon, and
                ``(ii) the deficit reduction rate shall be 5.55 cents 
            per gallon.''
    (d) Fuel Used in Commercial Transportation on Inland Waterways.--
        (1) In general.--Section 4042(b)(1) (relating to amount of tax) 
    is amended--
            (A) by striking ``and'' at the end of subparagraph (A),
            (B) by striking the period at the end of subparagraph (B) 
        and inserting ``, and'', and
            (C) by adding at the end thereof the following new 
        subparagraph:
            ``(C) the deficit reduction rate.''
        (2) Rate.--Section 4042(b)(2) (relating to rates) is amended by 
    adding at the end the following new subparagraph:
            ``(C) The deficit reduction rate is 4.3 cents per gallon.''
    (e) Compressed Natural Gas.--
        (1) In general.--Subsection (a) of section 4041 is amended by 
    adding at the end thereof the following new paragraph:
        ``(3) Compressed natural gas.--
            ``(A) In general.--There is hereby imposed a tax on 
        compressed natural gas--
                ``(i) sold by any person to an owner, lessee, or other 
            operator of a motor vehicle or motorboat for use as a fuel 
            in such motor vehicle or motorboat, or
                ``(ii) used by any person as a fuel in a motor vehicle 
            or motorboat unless there was a taxable sale of such gas 
            under clause (i).
        The rate of the tax imposed by this paragraph shall be 48.54 
        cents per MCF (determined at standard temperature and pressure).
            ``(B) Bus uses.--No tax shall be imposed by this paragraph 
        on any sale for use, or use, described in subparagraph (B) or 
        (C) of section 6427(b)(2) (relating to school bus and intracity 
        transportation).
            ``(C) Administrative provisions.--For purposes of applying 
        this title with respect to the taxes imposed by this subsection, 
        references to any liquid subject to tax under this subsection 
        shall be treated as including references to compressed natural 
        gas subject to tax under this paragraph, and references to 
        gallons shall be treated as including references to MCF with 
        respect to such gas.''
        (2) Exemption from leaking underground storage tank trust fund 
    tax.--Paragraph (1) of section 4041(d) is amended by striking 
    ``subsection (a)'' the second place it appears in the text and 
    inserting ``subsection (a)(1) or (2)''.
    (f) Conforming Amendments.--
        (1) Paragraph (3) of section 4041(f) is hereby repealed.
        (2) Subsection (g) of section 4041 is amended by striking the 
    last sentence.
        (3) Subparagraphs (A) and (B) of section 4093(c)(2) are amended 
    to read as follows:
            ``(A) No exemption from certain taxes on fuel used in 
        diesel-powered trains.--In the case of fuel sold for use in a 
        diesel-powered train, paragraph (1) shall not apply to so much 
        of the tax imposed by section 4091 as is attributable to the 
        Leaking Underground Storage Tank Trust Fund financing rate and 
        the diesel fuel deficit reduction rate imposed under such 
        section. The preceding sentence shall not apply in the case of 
        fuel sold for exclusive use by a State or any political 
        subdivision thereof.
            ``(B) No exemption from leaking underground storage tank 
        trust fund taxes on fuel used in commercial aviation.--In the 
        case of fuel sold for use in commercial aviation (other than 
        supplies for vessels or aircraft within the meaning of section 
        4221(d)(3)), paragraph (1) also shall not apply to so much of 
        the tax imposed by section 4091 as is attributable to the 
        Leaking Underground Storage Tank Trust Fund financing rate 
        imposed by such section. For purposes of the preceding sentence, 
        the term `commercial aviation' means any use of an aircraft 
        other than in noncommercial aviation (as defined in section 
        4041(c)(4)).''
        (4) Section 4093(d) is amended by inserting ``and the aviation 
    fuel deficit reduction rate'' after ``rate''.
        (5) Section 6420 is amended by striking subsection (h).
        (6) Paragraph (3) of section 6421(f) is amended by inserting 
    ``and at the deficit reduction rate'' after ``financing rate'', and 
    by inserting ``and deficit reduction tax'' after ``tax'' in the 
    heading.
        (7) Section 6421 is amended by striking subsection (i).
        (8) Paragraph (2) of section 6427(b) is amended--
            (A) by striking ``3.1 cents'' in subparagraph (A) and 
        inserting ``7.4 cents'', and
            (B) by striking ``3-cent reduction'' in the paragraph 
        heading and inserting ``Reduction''.
        (9) Section 6427(l) is amended by striking paragraphs (3) and 
    (4) and inserting the following new paragraphs:
        ``(3) No refund of certain taxes on fuel used in diesel-powered 
    trains.--In the case of fuel used in a diesel-powered train, 
    paragraph (1) shall not apply to so much of the tax imposed by 
    section 4091 as is attributable to the Leaking Underground Storage 
    Tank Trust Fund financing rate and the diesel fuel deficit reduction 
    rate imposed by such section. The preceding sentence shall not apply 
    in the case of fuel sold for exclusive use by a State or any 
    political subdivision thereof.
        ``(4) No refund of leaking underground storage tank trust fund 
    taxes on fuel used in commercial aviation.--In the case of fuel used 
    in commercial aviation (as defined in section 4093(c)(2)(B)) (other 
    than supplies for vessels or aircraft within the meaning of section 
    4221(d)(3)), paragraph (1) shall not apply to so much of the tax 
    imposed by section 4091 as is attributable to the Leaking 
    Underground Storage Tank Trust Fund financing rate imposed by such 
    section.''
        (10) Section 6427 is amended by striking subsections (m) and 
    (o).
    (g) Effective Date.--The amendments made by this section shall take 
effect on October 1, 1993.
    (h) Floor Stocks Taxes.--
        (1) Imposition of tax.--In the case of gasoline, diesel fuel, 
    and aviation fuel on which tax was imposed under section 4081 or 
    4091 of the Internal Revenue Code of 1986 before October 1, 1993, 
    and which is held on such date by any person, there is hereby 
    imposed a floor stocks tax of 4.3 cents per gallon on such gasoline, 
    diesel fuel, and aviation fuel.
        (2) Liability for tax and method of payment.--
            (A) Liability for tax.--A person holding gasoline, diesel 
        fuel, or aviation fuel on October 1, 1993, to which the tax 
        imposed by paragraph (1) applies shall be liable for such tax.
            (B) Method of payment.--The tax imposed by paragraph (1) 
        shall be paid in such manner as the Secretary shall prescribe.
            (C) Time for payment.--The tax imposed by paragraph (1) 
        shall be paid on or before November 30, 1993.
        (3) Definitions.--For purposes of this subsection--
            (A) Held by a person.--Gasoline, diesel fuel, and aviation 
        fuel shall be considered as ``held by a person'' if title 
        thereto has passed to such person (whether or not delivery to 
        the person has been made).
            (B) Gasoline.--The term ``gasoline'' has the meaning given 
        such term by section 4082 of such Code.
            (C) Diesel fuel.--The term ``diesel fuel'' has the meaning 
        given such term by section 4092 of such Code.
            (D) Aviation fuel.--The term ``aviation fuel'' has the 
        meaning given such term by section 4092 of such Code.
            (E) Secretary.--The term ``Secretary'' means the Secretary 
        of the Treasury or his delegate.
        (4) Exception for exempt uses.--The tax imposed by paragraph (1) 
    shall not apply to gasoline, diesel fuel, or aviation fuel held by 
    any person exclusively for any use to the extent a credit or refund 
    of the tax imposed by section 4081 or 4091 of such Code, as the case 
    may be, is allowable for such use.
        (5) Exception for fuel held in vehicle tank.--No tax shall be 
    imposed by paragraph (1) on gasoline or diesel fuel held in the tank 
    of a motor vehicle or motorboat.
        (6) Exception for certain amounts of fuel.--
            (A) In general.--No tax shall be imposed by paragraph (1)--
                (i) on gasoline held on October 1, 1993, by any person 
            if the aggregate amount of gasoline held by such person on 
            such date does not exceed 4,000 gallons, and
                (ii) on diesel fuel or aviation fuel held on October 1, 
            1993, by any person if the aggregate amount of diesel fuel 
            or aviation fuel held by such person on such date does not 
            exceed 2,000 gallons.
        The preceding sentence shall apply only if such person submits 
        to the Secretary (at the time and in the manner required by the 
        Secretary) such information as the Secretary shall require for 
        purposes of this paragraph.
            (B) Exempt fuel.--For purposes of subparagraph (A), there 
        shall not be taken into account fuel held by any person which is 
        exempt from the tax imposed by paragraph (1) by reason of 
        paragraph (4) or (5).
            (C) Controlled groups.--For purposes of this paragraph--
                (i) Corporations.--

                    (I) In general.--All persons treated as a controlled 
                group shall be treated as 1 person.
                    (II) Controlled group.--The term ``controlled 
                group'' has the meaning given to such term by subsection 
                (a) of section 1563 of such Code; except that for such 
                purposes the phrase ``more than 50 percent'' shall be 
                substituted for the phrase ``at least 80 percent'' each 
                place it appears in such subsection.

                (ii) Nonincorporated persons under common control.--
            Under regulations prescribed by the Secretary, principles 
            similar to the principles of clause (i) shall apply to a 
            group of persons under common control where 1 or more of 
            such persons is not a corporation.
        (7) Other law applicable.--All provisions of law, including 
    penalties, applicable with respect to the taxes imposed by section 
    4081 of such Code in the case of gasoline and section 4091 of such 
    Code in the case of diesel fuel and aviation fuel shall, insofar as 
    applicable and not inconsistent with the provisions of this 
    subsection, apply with respect to the floor stock taxes imposed by 
    paragraph (1) to the same extent as if such taxes were imposed by 
    such section 4081 or 4091.

             Subpart B--Modifications to Tax on Diesel Fuel

SEC. 13242. MODIFICATIONS TO TAX ON DIESEL FUEL.

    (a) In General.--Subparts A and B of part III of subchapter A of 
chapter 32 (relating to manufacturers excise taxes), as amended by 
subpart A, are amended to read as follows:

                  ``Subpart A--Gasoline and Diesel Fuel

        ``Sec. 4081. Imposition of tax.
        ``Sec. 4082. Exemptions for diesel fuel.
        ``Sec. 4083. Definitions; special rule; administrative 
                  authority.
        ``Sec. 4084. Cross references.

``SEC. 4081. IMPOSITION OF TAX.

    ``(a) Tax Imposed.--
        ``(1) Tax on removal, entry, or sale.--
            ``(A) In general.--There is hereby imposed a tax at the rate 
        specified in paragraph (2) on--
                ``(i) the removal of a taxable fuel from any refinery,
                ``(ii) the removal of a taxable fuel from any terminal,
                ``(iii) the entry into the United States of any taxable 
            fuel for consumption, use, or warehousing, and
                ``(iv) the sale of a taxable fuel to any person who is 
            not registered under section 4101 unless there was a prior 
            taxable removal or entry of such fuel under clause (i), 
            (ii), or (iii).
            ``(B) Exemption for bulk transfers to registered terminals 
        or refineries.--The tax imposed by this paragraph shall not 
        apply to any removal or entry of a taxable fuel transferred in 
        bulk to a terminal or refinery if the person removing or 
        entering the taxable fuel and the operator of such terminal or 
        refinery are registered under section 4101.
        ``(2) Rates of tax.--
            ``(A) In general.--The rate of the tax imposed by this 
        section is--
                ``(i) in the case of gasoline, 18.3 cents per gallon, 
            and
                ``(ii) in the case of diesel fuel, 24.3 cents per 
            gallon.
            ``(B) Leaking underground storage tank trust fund tax.--The 
        rates of tax specified in subparagraph (A) shall each be 
        increased by 0.1 cent per gallon. The increase in tax under this 
        subparagraph shall in this title be referred to as the Leaking 
        Underground Storage Tank Trust Fund financing rate.
    ``(b) Treatment of Removal or Subsequent Sale by Blender.--
        ``(1) In general.--There is hereby imposed a tax at the rate 
    determined under subsection (a) on taxable fuel removed or sold by 
    the blender thereof.
        ``(2) Credit for tax previously paid.--If--
            ``(A) tax is imposed on the removal or sale of a taxable 
        fuel by reason of paragraph (1), and
            ``(B) the blender establishes the amount of the tax paid 
        with respect to such fuel by reason of subsection (a),
    the amount of the tax so paid shall be allowed as a credit against 
    the tax imposed by reason of paragraph (1).
    ``(c) Taxable Fuels Mixed With Alcohol.--Under regulations 
prescribed by the Secretary--
        ``(1) In general.--The rate of tax under subsection (a) shall be 
    the alcohol mixture rate in the case of the removal or entry of any 
    qualified alcohol mixture.
        ``(2) Tax prior to mixing.--
            ``(A) In general.--In the case of the removal or entry of 
        any taxable fuel for use in producing at the time of such 
        removal or entry a qualified alcohol mixture, the rate of tax 
        under subsection (a) shall be the applicable fraction of the 
        alcohol mixture rate. Subject to such terms and conditions as 
        the Secretary may prescribe (including the application of 
        section 4101), the treatment under the preceding sentence also 
        shall apply to use in producing a qualified alcohol mixture 
        after the time of such removal or entry.
            ``(B) Applicable fraction.--For purposes of subparagraph 
        (A), the applicable fraction is--
                ``(i) in the case of a qualified alcohol mixture which 
            contains gasoline, the fraction the numerator of which is 10 
            and the denominator of which is--

                    ``(I) 9 in the case of 10 percent gasohol,
                    ``(II) 9.23 in the case of 7.7 percent gasohol, and
                    ``(III) 9.43 in the case of 5.7 percent gasohol, and

                ``(ii) in the case of a qualified alcohol mixture which 
            does not contain gasoline, \10/9\.
        ``(3) Alcohol; qualified alcohol mixture.--For purposes of this 
    subsection--
            ``(A) Alcohol.--The term `alcohol' includes methanol and 
        ethanol but does not include alcohol produced from petroleum, 
        natural gas, or coal (including peat). Such term does not 
        include alcohol with a proof of less than 190 (determined 
        without regard to any added denaturants).
            ``(B) Qualified alcohol mixture.--The term `qualified 
        alcohol mixture' means--
                ``(i) any mixture of gasoline with alcohol if at least 
            5.7 percent of such mixture is alcohol, and
                ``(ii) any mixture of diesel fuel with alcohol if at 
            least 10 percent of such mixture is alcohol.
        ``(4) Alcohol mixture rates for gasoline mixtures.--For purposes 
    of this subsection--
            ``(A) In general.--The alcohol mixture rate for a qualified 
        alcohol mixture which contains gasoline is the excess of the 
        rate which would (but for this paragraph) be determined under 
        subsection (a) over--
                ``(i) 5.4 cents per gallon for 10 percent gasohol,
                ``(ii) 4.158 cents per gallon for 7.7 percent gasohol, 
            and
                ``(iii) 3.078 cents per gallon for 5.7 percent gasohol.
        In the case of a mixture none of the alcohol in which consists 
        of ethanol, clauses (i), (ii), and (iii) shall be applied by 
        substituting `6 cents' for `5.4 cents', `4.62 cents' for `4.158 
        cents', and `3.42 cents' for `3.078 cents'.
            ``(B) 10 percent gasohol.--The term `10 percent gasohol' 
        means any mixture of gasoline with alcohol if at least 10 
        percent of such mixture is alcohol.
            ``(C) 7.7 percent gasohol.--The term `7.7 percent gasohol' 
        means any mixture of gasoline with alcohol if at least 7.7 
        percent, but not 10 percent or more, of such mixture is alcohol.
            ``(D) 5.7 percent gasohol.--The term `5.7 percent gasohol' 
        means any mixture of gasoline with alcohol if at least 5.7 
        percent, but not 7.7 percent or more, of such mixture is 
        alcohol.
        ``(5) Alcohol mixture rate for diesel fuel mixtures.--The 
    alcohol mixture rate for a qualified alcohol mixture which does not 
    contain gasoline is the excess of the rate which would (but for this 
    paragraph) be determined under subsection (a) over 5.4 cents per 
    gallon (6 cents per gallon in the case of a qualified alcohol 
    mixture none of the alcohol in which consists of ethanol).
        ``(6) Limitation.--In no event shall any alcohol mixture rate 
    determined under this subsection be less than 4.3 cents per gallon.
        ``(7) Later separation of fuel from qualified alcohol mixture.--
    If any person separates the taxable fuel from a qualified alcohol 
    mixture on which tax was imposed under subsection (a) at a rate 
    determined under paragraph (1) or (2) (or with respect to which a 
    credit or payment was allowed or made by reason of section 
    6427(f)(1)), such person shall be treated as the refiner of such 
    taxable fuel. The amount of tax imposed on any removal of such fuel 
    by such person shall be reduced by the amount of tax imposed (and 
    not credited or refunded) on any prior removal or entry of such 
    fuel.
        ``(8) Termination.--Paragraphs (1) and (2) shall not apply to 
    any removal, entry, or sale after September 30, 2000.
    ``(d) Termination.--
        ``(1) In general.--On and after October 1, 1999, each rate of 
    tax specified in subsection (a)(2)(A) shall be 4.3 cents per gallon.
        ``(2) Leaking underground storage tank trust fund financing 
    rate.--The Leaking Underground Storage Tank Trust Fund financing 
    rate under subsection (a)(2) shall not apply after December 31, 
    1995.
    ``(e) Refunds in Certain Cases.--Under regulations prescribed by the 
Secretary, if any person who paid the tax imposed by this section with 
respect to any taxable fuel establishes to the satisfaction of the 
Secretary that a prior tax was paid (and not credited or refunded) with 
respect to such taxable fuel, then an amount equal to the tax paid by 
such person shall be allowed as a refund (without interest) to such 
person in the same manner as if it were an overpayment of tax imposed by 
this section.

``SEC. 4082. EXEMPTIONS FOR DIESEL FUEL.

    ``(a) In General.--The tax imposed by section 4081 shall not apply 
to diesel fuel--
        ``(1) which the Secretary determines is destined for a 
    nontaxable use,
        ``(2) which is indelibly dyed in accordance with regulations 
    which the Secretary shall prescribe, and
        ``(3) which meets such marking requirements (if any) as may be 
    prescribed by the Secretary in regulations.
Such regulations shall allow an individual choice of dye color approved 
by the Secretary or chosen from any list of approved dye colors that the 
Secretary may publish.
    ``(b) Nontaxable Use.--For purposes of this section, the term 
`nontaxable use' means--
        ``(1) any use which is exempt from the tax imposed by section 
    4041(a)(1) other than by reason of a prior imposition of tax,
        ``(2) any use in a train, and
        ``(3) any use described in section 6427(b)(1) (after the 
    application of section 6427(b)(3)).
    ``(c) Regulations.--The Secretary shall prescribe such regulations 
as may be necessary to carry out this section, including regulations 
requiring the conspicuous labeling of retail diesel fuel pumps and other 
delivery facilities to assure that persons are aware of which fuel is 
available only for nontaxable uses.
    ``(d) Cross Reference.--
          ``For tax on train and certain bus uses of fuel purchased tax-
        free, see section 4041(a)(1).

``SEC. 4083. DEFINITIONS; SPECIAL RULE; ADMINISTRATIVE AUTHORITY.

    ``(a) Taxable Fuel.--For purposes of this subpart--
        ``(1) In general.--The term `taxable fuel' means--
            ``(A) gasoline, and
            ``(B) diesel fuel.
        ``(2) Gasoline.--The term `gasoline' includes, to the extent 
    prescribed in regulations--
            ``(A) gasoline blend stocks, and
            ``(B) products commonly used as additives in gasoline.
    For purposes of subparagraph (A), the term `gasoline blend stock' 
    means any petroleum product component of gasoline.
        ``(3) Diesel fuel.--The term `diesel fuel' means any liquid 
    (other than gasoline) which is suitable for use as a fuel in a 
    diesel-powered highway vehicle, a diesel-powered train, or a diesel-
    powered boat.
    ``(b) Certain Uses Defined as Removal.--If any person uses taxable 
fuel (other than in the production of gasoline, diesel fuel, or special 
fuels referred to in section 4041), such use shall for the purposes of 
this chapter be considered a removal.
    ``(c) Administrative Authority.--
        ``(1) In general.--In addition to the authority otherwise 
    granted by this title, the Secretary may in administering compliance 
    with this subpart, section 4041, and penalties and other 
    administrative provisions related thereto--
            ``(A) enter any place at which taxable fuel is produced or 
        is stored (or may be stored) for purposes of--
                ``(i) examining the equipment used to determine the 
            amount or composition of such fuel and the equipment used to 
            store such fuel, and
                ``(ii) taking and removing samples of such fuel, and
            ``(B) detain, for the purposes referred in subparagraph (A), 
        any container which contains or may contain any taxable fuel.
        ``(2) Inspection sites.--The Secretary may establish inspection 
    sites for purposes of carrying out the Secretary's authority under 
    paragraph (1)(B).
        ``(3) Penalty for refusal of entry.--The penalty provided by 
    section 7342 shall apply to any refusal to admit entry or other 
    refusal to permit an action by the Secretary authorized by paragraph 
    (1), except that section 7342 shall be applied by substituting 
    `$1,000' for `$500' for each such refusal.

``SEC. 4084. CROSS REFERENCES.

          ``(1) For provisions to relieve farmers from excise tax in the 
        case of gasoline used on the farm for farming purposes, see 
        section 6420.
          ``(2) For provisions to relieve purchasers of gasoline from 
        excise tax in the case of gasoline used for certain nonhighway 
        purposes, used by local transit systems, or sold for certain 
        exempt purposes, see section 6421.
          ``(3) For provisions to relieve purchasers from excise tax in 
        the case of taxable fuel not used for taxable purposes, see 
        section 6427.

                       ``Subpart B--Aviation Fuel

        ``Sec. 4091. Imposition of tax.
        ``Sec. 4092. Exemptions.
        ``Sec. 4093. Definitions.

``SEC. 4091. IMPOSITION OF TAX.

    ``(a) Tax on Sale.--
        ``(1) In general.--There is hereby imposed a tax on the sale of 
    aviation fuel by the producer or the importer thereof or by any 
    producer of aviation fuel.
        ``(2) Use treated as sale.--For purposes of paragraph (1), if 
    any producer uses aviation fuel (other than for a nontaxable use as 
    defined in section 6427(l)(2)(B)) on which no tax has been imposed 
    under such paragraph, then such use shall be considered a sale.
    ``(b) Rate of Tax.--
        ``(1) In general.--The rate of the tax imposed by subsection (a) 
    shall be 21.8 cents per gallon.
        ``(2) Leaking underground storage tank trust fund tax.--The rate 
    of tax specified in paragraph (1) shall be increased by 0.1 cent per 
    gallon. The increase in tax under this paragraph shall in this title 
    be referred to as the Leaking Underground Storage Tank Trust Fund 
    financing rate.
        ``(3) Termination.--
            ``(A) On and after January 1, 1996, the rate of tax 
        specified in paragraph (1) shall be 4.3 cents per gallon.
            ``(B) The Leaking Underground Storage Tank Fund financing 
        rate shall not apply during any period during which the Leaking 
        Underground Storage Tank Trust Fund financing rate under section 
        4081 does not apply.
    ``(c) Reduced Rate of Tax for Aviation Fuel in Alcohol Mixture, 
Etc.--Under regulations prescribed by the Secretary--
        ``(1) In general.--The rate of tax under subsection (a) shall be 
    reduced by 13.4 cents per gallon in the case of the sale of any 
    mixture of aviation fuel if--
            ``(A) at least 10 percent of such mixture consists of 
        alcohol (as defined in section 4081(c)(3)), and
            ``(B) the aviation fuel in such mixture was not taxed under 
        paragraph (2).
    In the case of such a mixture none of the alcohol in which is 
    ethanol, the preceding sentence shall be applied by substituting `14 
    cents' for `13.4 cents'.
        ``(2) Tax prior to mixing.--In the case of the sale of aviation 
    fuel for use (at the time of such sale) in producing a mixture 
    described in paragraph (1), the rate of tax under subsection (a) 
    shall be \10/9\ of the rate which would (but for this paragraph) 
    have been applicable to such mixture had such mixture been created 
    prior to such sale.
        ``(3) Later separation.--If any person separates the aviation 
    fuel from a mixture of the aviation fuel and alcohol on which tax 
    was imposed under subsection (a) at a rate determined under 
    paragraph (1) or (2) (or with respect to which a credit or payment 
    was allowed or made by reason of section 6427(f)(1)), such person 
    shall be treated as the producer of such aviation fuel. The amount 
    of tax imposed on any sale of such aviation fuel by such person 
    shall be reduced by the amount of tax imposed (and not credited or 
    refunded) on any prior sale of such fuel.
        ``(4) Limitation.--In no event shall any rate determined under 
    paragraph (1) be less than 4.3 cents per gallon.
        ``(5) Termination.--Paragraphs (1) and (2) shall not apply to 
    any sale after September 30, 2000.

``SEC. 4092. EXEMPTIONS.

    ``(a) Nontaxable Uses.--No tax shall be imposed by section 4091 on 
aviation fuel sold by a producer or importer for use by the purchaser in 
a nontaxable use (as defined in section 6427(l)(2)(B)).
    ``(b) No Exemption From Certain Taxes on Fuel Used in Commercial 
Aviation.--In the case of fuel sold for use in commercial aviation 
(other than supplies for vessels or aircraft within the meaning of 
section 4221(d)(3)), subsection (a) shall not apply to so much of the 
tax imposed by section 4091 as is attributable to--
        ``(1) the Leaking Underground Storage Tank Trust Fund financing 
    rate imposed by such section, and
        ``(2) in the case of fuel sold after September 30, 1995, 4.3 
    cents per gallon of the rate specified in section 4091(b)(1).
For purposes of the preceding sentence, the term `commercial aviation' 
means any use of an aircraft other than in noncommercial aviation (as 
defined in section 4041(c)(4)).
    ``(c) Sales to Producer.--Under regulations prescribed by the 
Secretary, the tax imposed by section 4091 shall not apply to aviation 
fuel sold to a producer of such fuel.

``SEC. 4093. DEFINITIONS.

    ``(a) Aviation Fuel.--For purposes of this subpart, the term 
`aviation fuel' means any liquid (other than any product taxable under 
section 4081) which is suitable for use as a fuel in an aircraft.
    ``(b) Producer.--For purposes of this subpart--
        ``(1) Certain persons treated as producers.--
            ``(A) In general.--The term `producer' includes any person 
        described in subparagraph (B) and registered under section 4101 
        with respect to the tax imposed by section 4091.
            ``(B) Persons described.--A person is described in this 
        subparagraph if such person is--
                ``(i) a refiner, blender, or wholesale distributor of 
            aviation fuel, or
                ``(ii) a dealer selling aviation fuel exclusively to 
            producers of aviation fuel.
            ``(C) Reduced rate purchasers treated as producers.--Any 
        person to whom aviation fuel is sold at a reduced rate under 
        this subpart shall be treated as the producer of such fuel.
        ``(2) Wholesale distributor.--For purposes of paragraph (1), the 
    term `wholesale distributor' includes any person who sells aviation 
    fuel to producers, retailers, or to users who purchase in bulk 
    quantities and accept delivery into bulk storage tanks. Such term 
    does not include any person who (excluding the term `wholesale 
    distributor' from paragraph (1)) is a producer or importer.''
    (b) Civil Penalty for Using Reduced-Rate Fuel for Taxable Use, 
Etc.--
        (1) In general.--Part I of subchapter B of chapter 68 (relating 
    to assessable penalties) is amended by adding at the end thereof the 
    following new section:
``SEC. 6714. DYED FUEL SOLD FOR USE OR USED IN TAXABLE USE, ETC.
    ``(a) Imposition of Penalty.--If--
        ``(1) any dyed fuel is sold or held for sale by any person for 
    any use which such person knows or has reason to know is not a 
    nontaxable use of such fuel,
        ``(2) any dyed fuel is held for use or used by any person for a 
    use other than a nontaxable use and such person knew, or had reason 
    to know, that such fuel was so dyed, or
        ``(3) any person willfully alters, or attempts to alter, the 
    strength or composition of any dye or marking done pursuant to 
    section 4082 in any dyed fuel,
then such person shall pay a penalty in addition to the tax (if any).
    ``(b) Amount of Penalty.--
        ``(1) In general.--Except as provided in paragraph (2), the 
    amount of the penalty under subsection (a) on each act shall be the 
    greater of--
            ``(A) $1,000, or
            ``(B) $10 for each gallon of the dyed fuel involved.
        ``(2) Multiple violations.--In determining the penalty under 
    subsection (a) on any person, paragraph (1) shall be applied by 
    increasing the amount in paragraph (1)(A) by the product of such 
    amount and the number of prior penalties (if any) imposed by this 
    section on such person (or a related person or any predecessor of 
    such person or related person).
    ``(c) Definitions.--For purposes of this section--
        ``(1) Dyed fuel.--The term `dyed fuel' means any dyed diesel 
    fuel, whether or not the fuel was dyed pursuant to section 4082.
        ``(2) Nontaxable use.--The term `nontaxable use' has the meaning 
    given such term by section 4082(b).
    ``(d) Joint and Several Liability of Certain Officers and 
Employees.--If a penalty is imposed under this section on any business 
entity, each officer, employee, or agent of such entity who willfully 
participated in any act giving rise to such penalty shall be jointly and 
severally liable with such entity for such penalty.''
        (2) Clerical amendment.--The table of sections for such part I 
    is amended by adding at the end thereof the following new item:
        ``Sec. 6714. Dyed fuel sold for use or used in taxable use, 
                  etc.''
    (c) Registered Vendors To Administer Claims for Certain Refunds of 
Diesel Fuel.--
        (1) In general.--Section 6427(l) (relating to nontaxable uses of 
    diesel fuel and aviation fuel) is amended by adding at the end the 
    following new paragraph:
        ``(5) Registered vendors to administer claims for refund of 
    diesel fuel sold to farmers and state and local governments.--
            ``(A) In general.--Paragraph (1) shall not apply to diesel 
        fuel used--
                ``(i) on a farm for farming purposes (within the meaning 
            of section 6420(c)), or
                ``(ii) by a State or local government.
            ``(B) Payment to ultimate, registered vendor.--The amount 
        which would (but for subparagraph (A)) have been paid under 
        paragraph (1) with respect to any fuel shall be paid to the 
        ultimate vendor of such fuel, if such vendor--
                ``(i) is registered under section 4101, and
                ``(ii) meets the requirements of subparagraph (A), (B), 
            or (D) of section 6416(a)(1).''
        (2) Special refund rules.--
            (A) Subsection (i) of section 6427 is amended by adding at 
        the end thereof the following new paragraph:
        ``(5) Special rule for vendor refunds.--
            ``(A) In general.--A claim may be filed under subsection 
        (l)(5) by any person with respect to fuel sold by such person 
        for any period--
                ``(i) for which $200 or more is payable under subsection 
            (l)(5), and
                ``(ii) which is not less than 1 week.
        Notwithstanding subsection (l)(1), paragraph (3)(B) shall apply 
        to claims filed under the preceding sentence.
            ``(B) Time for filing claim.--No claim filed under this 
        paragraph shall be allowed unless filed on or before the last 
        day of the first quarter following the earliest quarter included 
        in the claim.''
            (B) Paragraph (1) of section 6427(i) is amended by striking 
        ``provided in paragraphs (2), (3), and (4)'' and inserting 
        ``otherwise provided in this subsection''.
            (C) Paragraph (2) of section 6427(k) is amended by striking 
        ``or (4)'' and inserting ``(4), or (5)''.
            (D) Paragraph (3) of section 6427(i) is amended by adding at 
        the end thereof the following new subparagraph:
            ``(C) Time for filing claim.--No claim filed under this 
        paragraph shall be allowed unless filed on or before the last 
        day of the first quarter following the earliest quarter included 
        in the claim.''
    (d) Technical and Conforming Amendments.--
        (1) Sections 4101(a) and 4103 are each amended by striking 
    ``4081'' and inserting ``4041(a)(1), 4081,''.
        (2) Section 4102 is amended by striking ``gasoline'' and 
    inserting ``any taxable fuel (as defined in section 4083)''.
        (3) Paragraph (1) of section 4041(a), as amended by subchapter 
    A, is amended to read as follows:
        ``(1) Tax on diesel fuel in certain cases.--
            ``(A) In general.--There is hereby imposed a tax on any 
        liquid other than gasoline (as defined in section 4083)--
                ``(i) sold by any person to an owner, lessee, or other 
            operator of a diesel-powered highway vehicle, a diesel-
            powered train, or a diesel-powered boat for use as a fuel in 
            such vehicle, train, or boat, or
                ``(ii) used by any person as a fuel in a diesel-powered 
            highway vehicle, a diesel-powered train, or a diesel-powered 
            boat unless there was a taxable sale of such fuel under 
            clause (i).
            ``(B) Exemption for previously taxed fuel.--No tax shall be 
        imposed by this paragraph on the sale or use of any liquid if 
        tax was imposed on such liquid under section 4081 and the tax 
        thereon was not credited or refunded.
            ``(C) Rate of tax.--
                ``(i) In general.--Except as otherwise provided in this 
            subparagraph, the rate of the tax imposed by this paragraph 
            shall be the rate of tax specified in section 4081(a)(2)(A) 
            on diesel fuel which is in effect at the time of such sale 
            or use.
                ``(ii) Rate of tax on trains.--In the case of any sale 
            for use, or use, of diesel fuel in a train, the rate of tax 
            imposed by this paragraph shall be--

                    ``(I) 6.8 cents per gallon after September 30, 1993, 
                and before October 1, 1995,
                    ``(II) 5.55 cents per gallon after September 30, 
                1995, and before October 1, 1999, and
                    ``(III) 4.3 cents per gallon after September 30, 
                1999.

                ``(iii) Rate of tax on certain buses.--

                    ``(I) In general.--Except as provided in subclause 
                (II), in the case of fuel sold for use or used in a use 
                described in section 6427(b)(1) (after the application 
                of section 6427(b)(3)), the rate of tax imposed by this 
                paragraph shall be 7.3 cents per gallon (4.3 cents per 
                gallon after September 30, 1999).
                    ``(II) School bus and intracity transportation.--No 
                tax shall be imposed by this paragraph on any sale for 
                use, or use, described in subparagraph (B) or (C) of 
                section 6427(b)(2).

            ``(D) Diesel fuel used in motorboats.--In the case of any 
        sale for use, or use, of fuel in a diesel-powered motorboat--
                ``(i) effective during the period after September 30, 
            1999, and before January 1, 2000, the rate of tax imposed by 
            this paragraph is 24.3 cents per gallon, and
                ``(ii) the termination of the tax under subsection (d) 
            shall not occur before January 1, 2000.''
        (4) Paragraph (2) of section 4041(a) is amended--
            (A) by striking ``or paragraph (1) of this subsection'', and
            (B) by striking the last sentence and inserting the 
        following new flush sentence:
    ``The rate of the tax imposed by this paragraph shall be the rate of 
    tax specified in section 4081(a)(2)(A) on gasoline which is in 
    effect at the time of such sale or use.''
        (5)(A) Subparagraph (B) of section 4041(b)(1) is amended by 
    striking ``paragraph (1)(B) or (2)(B)'' and inserting ``paragraph 
    (1)(B), (2)(B), or (3)(A)(ii)'' and by inserting before the period 
    ``(if any)''.
        (B) Subparagraph (C) of section 4041(b)(1) is amended by 
    inserting before the period ``; except that such term shall not, for 
    purposes of subsection (a)(1), include use in a diesel-powered 
    train''.
        (C) Clause (i) of section 4041(b)(2)(A) is amended by striking 
    ``Highway Trust Fund financing''.
        (6) Paragraph (1) of section 4041(c), as amended by subpart A, 
    is amended by striking the next to the last sentence and inserting 
    the following new flush sentence:
    ``The rate of the tax imposed by this paragraph shall be the rate of 
    tax specified in section 4091(b)(1) which is in effect at the time 
    of such sale or use.''
        (7) Paragraph (2) of section 4041(c) is amended by striking 
    ``any product taxable under section 4081'' and inserting ``gasoline 
    (as defined in section 4083)''.
        (8) Paragraph (5) of section 4041(c) is amended by adding at the 
    end thereof the following: ``The termination under the preceding 
    sentence shall not apply to so much of the tax imposed by paragraph 
    (1) as does not exceed 4.3 cents per gallon.''.
        (9) Subsection (d) of section 4041 is amended by striking 
    paragraph (2) and by redesignating paragraphs (3) and (4) as 
    paragraphs (2) and (3), respectively.
        (10) Paragraph (2) of section 4041(d), as redesignated by the 
    preceding paragraph, is amended by striking ``(other than any 
    product taxable under section 4081)'' and inserting ``(other than 
    gasoline (as defined in section 4083))''.
        (11) Subparagraph (A) of section 4041(k)(1) is amended--
            (A) by striking ``Highway Trust Fund financing'', and
            (B) by striking ``sections 4081(c) and 4091(c), as the case 
        may be'' and inserting ``section 4081(c)''.
        (12) Subparagraph (B) of section 4041(k)(1) is amended by 
    striking ``4091(d)'' and inserting ``4091(c)''.
        (13) Subparagraphs (A) and (B) of section 4041(m)(1) are amended 
    to read as follows:
            ``(A) the rate of the tax imposed by subsection (a)(2) shall 
        be--
                ``(i) 11.3 cents per gallon after September 30, 1993, 
            and before October 1, 1999, and
                ``(ii) 4.3 cents per gallon after September 30, 1999, 
            and
            ``(B) the rate of the tax imposed by subsection (c)(1) shall 
        be the comparable rate under section 4091(c)(1).''
        (14) Section 6206 is amended by striking ``4041 or 4091'' and 
    inserting ``4041, 4081, or 4091''.
        (15) The heading for subsection (f) of section 6302 is amended 
    by inserting ``and Diesel Fuel'' after ``Gasoline''.
        (16) Paragraph (1) of section 6412(a) is amended by striking 
    ``gasoline'' each place it appears (including the heading) and 
    inserting ``taxable fuel''.
        (17)(A) Subparagraph (A) of section 6416(a)(4) is amended by 
    striking ``product'' each place it appears and inserting 
    ``gasoline''.
        (B) Subparagraph (B) of section 6416(a)(4) is amended--
            (i) by striking ``section 4092(b)(2)'' and inserting 
        ``section 4093(b)(2)'', and
            (ii) by striking all that follows ``substituting'' and 
        inserting ```any gasoline taxable under section 4081' for 
        `aviation fuel' therein).''
        (18) The material following the first sentence of section 
    6416(b)(2) is amended by inserting ``any tax imposed under section 
    4041(a)(1) or 4081 on diesel fuel and'' after ``This paragraph shall 
    not apply in the case of''.
        (19)(A) Subparagraph (A) of section 6416(b)(3) is amended by 
    striking ``gasoline taxable under section 4081 and other than any 
    fuel taxable under section 4091'' and inserting ``any fuel taxable 
    under section 4081 or 4091''.
        (B) Subparagraph (B) of section 6416(b)(3) is amended by 
    striking ``gasoline taxable under section 4081 or any fuel taxable 
    under section 4091, such gasoline or fuel'' and inserting ``any fuel 
    taxable under section 4081 or 4091, such fuel''.
        (20) Sections 6420(c)(5) and 6421(e)(1) are each amended by 
    striking ``section 4082(b)'' and inserting ``section 4083(a)''.
        (21) Subsections (a) and (c) of section 6427 are each amended by 
    striking ``section 4041(a) or (c)'' and inserting ``paragraph (2) or 
    (3) of section 4041(a) or section 4041(c)''.
        (22) Subsection (c) of section 6421 is amended by adding at the 
    end thereof the following: ``The preceding sentence shall apply 
    notwithstanding paragraphs (2)(A) and (3) of subsection (f).''
        (23) Subparagraph (B) of section 6421(f)(2) is amended by 
    inserting before the period ``and, in the case of fuel purchased 
    after September 30, 1995, at so much of the rate specified in 
    section 4081(a)(2)(A) as does not exceed 4.3 cents per gallon''.
        (24) Paragraph (3) of section 6421(f), as amended by subpart A, 
    is amended to read as follows:
        ``(3) Gasoline used in trains.--In the case of gasoline used as 
    a fuel in a train, this section shall not apply with respect to--
            ``(A) the Leaking Underground Storage Tank Trust Fund 
        financing rate under section 4081, and
            ``(B) so much of the rate specified in section 4081(a)(2)(A) 
        as does not exceed--
                ``(i) 6.8 cents per gallon after September 30, 1993, and 
            before October 1, 1995,
                ``(ii) 5.55 cents per gallon after September 30, 1995, 
            and before October 1, 1999, and
                ``(iii) 4.3 cents per gallon after September 30, 1999.''
        (25) Subsection (b) of section 6427 is amended--
            (A) by striking ``if any fuel'' in paragraph (1) and 
        inserting ``if any fuel other than gasoline (as defined in 
        section 4083(a))'', and
            (B) by striking ``4091'' each place it appears and inserting 
        ``4081''.
        (26)(A) Paragraph (1) of section 6427(f) is amended by striking 
    ``, 4091(c)(1)(A), or 4091(d)(1)(A)'' and inserting ``or 
    4091(c)(1)(A)''.
        (B) Paragraph (2) of section 6427(f) is amended to read as 
    follows:
        ``(2) Definitions.--For purposes of paragraph (1)--
            ``(A) Regular tax rate.--The term `regular tax rate' means--
                ``(i) in the case of gasoline or diesel fuel, the 
            aggregate rate of tax imposed by section 4081 determined 
            without regard to subsection (c) thereof, and
                ``(ii) in the case of aviation fuel, the aggregate rate 
            of tax imposed by section 4091 determined without regard to 
            subsection (c) thereof.
            ``(B) Incentive tax rate.--The term `incentive tax rate' 
        means--
                ``(i) in the case of gasoline or diesel fuel, the 
            aggregate rate of tax imposed by section 4081 with respect 
            to fuel described in subsection (c)(2) thereof, and
                ``(ii) in the case of aviation fuel, the aggregate rate 
            of tax imposed by section 4091 with respect to fuel 
            described in subsection (c)(2) thereof.''
        (27) Subsection (h) of section 6427 is amended by striking 
    ``section 4082(b)'' and inserting ``section 4083(a)(2)''.
        (28) Paragraph (3) of section 6427(i) is amended--
            (A) by striking ``gasohol'' in the heading and inserting 
        ``alcohol mixture'', and
            (B) by striking ``gasoline used to produce gasohol (as 
        defined in section 4081(c)(1))'' in subparagraph (A) and 
        inserting ``gasoline or diesel fuel used to produce a qualified 
        alcohol mixture (as defined in section 4081(c)(3))''.
        (29) Paragraph (1) of section 6427(j) is amended by striking 
    ``section 4041'' and inserting ``sections 4041, 4081, and 4091''.
        (30) The heading of paragraph (4) of section 6427(i) is amended 
    by inserting ``4081 or'' before ``4091''.
        (31) So much of subsection (l) of section 6427, as previously 
    amended by this part, as precedes paragraph (5) is amended to read 
    as follows:
    ``(l) Nontaxable Uses of Diesel Fuel and Aviation Fuel.--
        ``(1) In general.--Except as otherwise provided in this 
    subsection and in subsection (k), if--
            ``(A) any diesel fuel on which tax has been imposed by 
        section 4041 or 4081, or
            ``(B) any aviation fuel on which tax has been imposed by 
        section 4091,
    is used by any person in a nontaxable use, the Secretary shall pay 
    (without interest) to the ultimate purchaser of such fuel an amount 
    equal to the aggregate amount of tax imposed on such fuel under 
    section 4041, 4081, or 4091, as the case may be.
        ``(2) Nontaxable use.--For purposes of this subsection, the term 
    `nontaxable use' means--
            ``(A) in the case of diesel fuel, any use which is exempt 
        from the tax imposed by section 4041(a)(1) other than by reason 
        of a prior imposition of tax, and
            ``(B) in the case of aviation fuel, any use which is exempt 
        from the tax imposed by section 4041(c)(1) other than by reason 
        of a prior imposition of tax.
        ``(3) Refund of certain taxes on fuel used in diesel-powered 
    trains.--For purposes of this subsection, the term `nontaxable use' 
    includes fuel used in a diesel-powered train. The preceding sentence 
    shall not apply with respect to--
            ``(A) the Leaking Underground Storage Tank Trust Fund 
        financing rate under sections 4041 and 4081, and
            ``(B) so much of the rate specified in section 4081(a)(2)(A) 
        as does not exceed--
                ``(i) 6.8 cents per gallon after September 30, 1993, and 
            before October 1, 1995,
                ``(ii) 5.55 cents per gallon after September 30, 1995, 
            and before October 1, 1999, and
                ``(iii) 4.3 cents per gallon after September 30, 1999.
    The preceding sentence shall not apply in the case of fuel sold for 
    exclusive use by a State or any political subdivision thereof.
        ``(4) No refund of certain taxes on fuel used in commercial 
    aviation.--In the case of fuel used in commercial aviation (as 
    defined in section 4092(b)) (other than supplies for vessels or 
    aircraft within the meaning of section 4221(d)(3)), paragraph (1) 
    shall not apply to so much of the tax imposed by section 4091 as is 
    attributable to--
            ``(A) the Leaking Underground Storage Tank Trust Fund 
        financing rate imposed by such section, and
            ``(B) in the case of fuel purchased after September 30, 
        1995, so much of the rate of tax specified in section 4091(b)(1) 
        as does not exceed 4.3 cents per gallon.''
        (32) Section 9502 is amended by adding at the end thereof the 
    following new subsection:
    ``(f) Definition of Airport and Airway Trust Fund Financing Rate.--
For purposes of this section--
        ``(1) In general.--Except as otherwise provided in this 
    subsection, the Airport and Airway Trust Fund financing rate is--
            ``(A) in the case of fuel used in an aircraft in 
        noncommercial aviation (as defined in section 4041(c)(4)), 17.5 
        cents per gallon, and
            ``(B) in the case of fuel used in an aircraft other than in 
        noncommercial aviation (as so defined), zero.
        ``(2) Alcohol fuels.--If the rate of tax on any fuel is 
    determined under section 4091(c), the Airport and Airway Trust Fund 
    financing rate is the excess (if any) of the rate of tax determined 
    under section 4091(c) over 4.4 cents per gallon (\10/9\ of 4.4 cents 
    per gallon in the case of a rate of tax determined under section 
    4091(c)(2)).
        ``(3) Termination.--Notwithstanding the preceding provisions of 
    this subsection, the Airport and Airway Trust Fund financing rate is 
    zero with respect to tax received after December 31, 1995.''
        (33) Paragraph (2) of section 9502(b) is amended by striking 
    ``(to the extent attributable to the Highway Trust Fund financing 
    rate and the deficit reduction rate)'' and inserting ``(to the 
    extent of 14 cents per gallon)''.
        (34) Paragraph (1) of section 9503(b) is amended--
            (A) by striking ``gasoline),'' in subparagraph (E) and 
        inserting ``gasoline and diesel fuel), and'',
            (B) by striking subparagraph (F), and
            (C) by redesignating subparagraph (G) as subparagraph (F).
        (35)(A) Subparagraph (B) of section 9503(b)(4) is amended by 
    striking ``, 4081, and 4091'' and inserting ``and 4081'' and by 
    striking ``rates under such sections'' and inserting ``rate''.
        (B) Subparagraph (C) of section 9503(b)(4), as amended by 
    subchapter A, is amended by striking ``4091'' and inserting 
    ``4081''.
        (36) Paragraph (5) of section 9503(b) is amended by striking ``, 
    (E), and (F)'' and inserting ``and (E)''.
        (37) Subparagraph (D) of section 9503(c)(6) is amended by 
    striking ``, 4081, and 4091'' and inserting ``and 4081''.
        (38) Subparagraph (D) of section 9503(c)(4) is amended by 
    striking ``rates under such sections'' and inserting ``rate''.
        (39) Subparagraph (B) of section 9503(c)(5) is amended by 
    striking ``rate under such section'' and inserting ``rate''.
        (40) Paragraph (2) of section 9503(e) is amended--
            (A) by striking ``, 4081, and 4091'' and inserting ``and 
        4081'', and
            (B) by striking ``, 4081, or 4091'' and inserting ``or 
        4081''.
        (41) Section 9503 is amended by adding at the end thereof the 
    following new subsection:
    ``(f) Definition of Highway Trust Fund Financing Rate.--For purposes 
of this section--
        ``(1) In general.--Except as otherwise provided in this 
    subsection, the Highway Trust Fund financing rate is--
            ``(A) in the case of gasoline and special motor fuels, 11.5 
        cents per gallon (14 cents per gallon after September 30, 1995), 
        and
            ``(B) in the case of diesel fuel, 17.5 cents per gallon (20 
        cents per gallon after September 30, 1995).
        ``(2) Certain uses.--
            ``(A) Trains.--In the case of fuel used in a train, the 
        Highway Trust Fund financing rate is zero.
            ``(B) Certain buses.--In the case of diesel fuel used in a 
        use described in section 6427(b)(1) (after the application of 
        section 6427(b)(3)), the Highway Trust Fund financing rate is 3 
        cents per gallon.
            ``(C) Certain boats.--In the case of diesel fuel used in a 
        boat described in clause (iv) of section 6421(e)(2)(B), the 
        Highway Trust Fund financing rate is zero.
            ``(D) Compressed natural gas.--In the case of the tax 
        imposed by section 4041(a)(3), the Highway Trust Fund financing 
        rate is zero.
            ``(E) Certain other nonhighway uses.--In the case of 
        gasoline and special motor fuels used as described in paragraph 
        (4)(D), (5)(B), or (6)(D) of subsection (c), the Highway Trust 
        Fund financing rate is 11.5 cents per gallon; and, in the case 
        of diesel fuel used as described in subsection (c)(6)(D), the 
        Highway Trust Fund financing rate is 17.5 cents per gallon.
        ``(3) Alcohol fuels.--
            ``(A) In general.--If the rate of tax on any fuel is 
        determined under section 4041(b)(2)(A), 4041(k), or 4081(c), the 
        Highway Trust Fund financing rate is the excess (if any) of the 
        rate so determined over--
                ``(i) 6.8 cents per gallon after September 30, 1993, and 
            before October 1, 1999,
                ``(ii) 4.3 cents per gallon after September 30, 1999.
        In the case of a rate of tax determined under section 4081(c), 
        the preceding sentence shall be applied by increasing the rates 
        specified in clauses (i) and (ii) by 0.1 cent.
            ``(B) Fuels used to produce mixtures.--In the case of a rate 
        of tax determined under section 4081(c)(2), subparagraph (A) 
        shall be applied by substituting rates which are \10/9\ of the 
        rates otherwise applicable under clauses (i) and (ii) of 
        subparagraph (A).
            ``(C) Partially exempt methanol or ethanol fuel.--In the 
        case of a rate of tax determined under section 4041(m), the 
        Highway Trust Fund financing rate is the excess (if any) of the 
        rate so determined over--
                ``(i) 5.55 cents per gallon after September 30, 1993, 
            and before October 1, 1995, and
                ``(ii) 4.3 cents per gallon after September 30, 1995.
        ``(4) Termination.--Notwithstanding the preceding provisions of 
    this subsection, the Highway Trust Fund financing rate is zero with 
    respect to taxes received in the Treasury after June 30, 2000.''
        (42) Subsection (b) of section 9508 is amended--
            (A) by inserting ``and diesel fuel'' after ``gasoline'' in 
        paragraph (2),
            (B) by striking ``diesel fuel and'' in paragraph (3), and
            (C) by striking ``4091'' in the last sentence, as added by 
        subtitle A, and inserting ``4081''.
        (43) The table of subparts for part III of subchapter A of 
    chapter 32 is amended by striking the items relating to subparts A 
    and B and inserting the following new items:
        ``Subpart A. Gasoline and diesel fuel.
        ``Subpart B. Aviation fuel.''

    (e) Effective Date.--The amendments made by this section shall take 
effect on January 1, 1994.

SEC. 13243. FLOOR STOCKS TAX.

    (a) In General.--There is hereby imposed a floor stocks tax on 
diesel fuel held by any person on January 1, 1994, if--
        (1) no tax was imposed on such fuel under section 4041(a) or 
    4091 of the Internal Revenue Code of 1986 as in effect on December 
    31, 1993, and
        (2) tax would have been imposed by section 4081 of such Code, as 
    amended by this Act, on any prior removal, entry, or sale of such 
    fuel had such section 4081 applied to such fuel for periods before 
    January 1, 1994.
    (b) Rate of Tax.--The rate of the tax imposed by subsection (a) 
shall be the amount of tax which would be imposed under section 4081 of 
the Internal Revenue Code of 1986 if there were a taxable sale of such 
fuel on such date.
    (c) Liability and Payment of Tax.--
        (1) Liability for tax.--A person holding the diesel fuel on 
    January 1, 1994, to which the tax imposed by this section applies 
    shall be liable for such tax.
        (2) Method of payment.--The tax imposed by this section shall be 
    paid in such manner as the Secretary shall prescribe.
        (3) Time for payment.--The tax imposed by this section shall be 
    paid on or before July 31, 1994.
    (d) Definitions.--For purposes of this section--
        (1) Diesel fuel.--The term ``diesel fuel'' has the meaning given 
    such term by section 4083(a) of such Code.
        (2) Secretary.--The term ``Secretary'' means the Secretary of 
    the Treasury or his delegate.
    (e) Exceptions.--
        (1) Persons entitled to credit or refund.--The tax imposed by 
    this section shall not apply to fuel held by any person exclusively 
    for any use to the extent a credit or refund of the tax imposed by 
    section 4081 is allowable for such use.
        (2) Compliance with dyeing required.--Paragraph (1) shall not 
    apply to the holder of any fuel if the holder of such fuel fails to 
    comply with any requirement imposed by the Secretary with respect to 
    dyeing and marking such fuel.
    (f) Other Laws Applicable.--All provisions of law, including 
penalties, applicable with respect to the taxes imposed by section 4081 
of such Code shall, insofar as applicable and not inconsistent with the 
provisions of this section, apply with respect to the floor stock taxes 
imposed by this section to the same extent as if such taxes were imposed 
by such section 4081.

                       Subpart C--Other Provisions

SEC. 13244. INCREASED DEPOSITS INTO MASS TRANSIT ACCOUNT.

    (a) In General.--Paragraph (2) of section 9503(e) is amended by 
striking ``1.5 cents'' and inserting ``2 cents''.
    (b) Effective Date.--The amendment made by this section shall apply 
to amounts attributable to taxes imposed on or after October 1, 1995.
SEC. 13245. FLOOR STOCKS TAX ON COMMERCIAL AVIATION FUEL HELD ON OCTOBER 
1, 1995.
    (a) Imposition of Tax.--In the case of commercial aviation fuel on 
which tax was imposed under section 4091 of the Internal Revenue Code of 
1986 before October 1, 1995, and which is held on such date by any 
person, there is hereby imposed a floor stocks tax of 4.3 cents per 
gallon.
    (b) Liability for Tax and Method of Payment.--
        (1) Liability for tax.--A person holding aviation fuel on 
    October 1, 1995, to which the tax imposed by subsection (a) applies 
    shall be liable for such tax.
        (2) Method of payment.--The tax imposed by subsection (a) shall 
    be paid in such manner as the Secretary shall prescribe.
        (3) Time for payment.--The tax imposed by subsection (a) shall 
    be paid on or before April 30, 1996.
    (c) Definitions.--For purposes of this subsection--
        (1) Held by a person.--Aviation fuel shall be considered as 
    ``held by a person'' if title thereto has passed to such person 
    (whether or not delivery to the person has been made).
        (2) Commercial aviation fuel.--The term ``commercial aviation 
    fuel'' means aviation fuel (as defined in section 4093 of such Code) 
    which is held on October 1, 1995, for sale or use in commercial 
    aviation (as defined in section 4092(b) of such Code).
        (3) Secretary.--The term ``Secretary'' means the Secretary of 
    the Treasury or his delegate.
    (d) Exception for Exempt Uses.--The tax imposed by subsection (a) 
shall not apply to aviation fuel held by any person exclusively for any 
use for which a credit or refund of the entire tax imposed by section 
4091 of such Code is allowable for aviation fuel purchased after 
September 30, 1995, for such use.
    (e) Exception for Certain Amounts of Fuel.--
        (1) In general.--No tax shall be imposed by subsection (a) on 
    aviation fuel held on October 1, 1995, by any person if the 
    aggregate amount of commercial aviation fuel held by such person on 
    such date does not exceed 2,000 gallons. The preceding sentence 
    shall apply only if such person submits to the Secretary (at the 
    time and in the manner required by the Secretary) such information 
    as the Secretary shall require for purposes of this paragraph.
        (2) Exempt fuel.--For purposes of paragraph (1), there shall not 
    be taken into account fuel held by any person which is exempt from 
    the tax imposed by subsection (a) by reason of subsection (d).
        (3) Controlled groups.--For purposes of this subsection--
            (A) Corporations.--
                (i) In general.--All persons treated as a controlled 
            group shall be treated as 1 person.
                (ii) Controlled group.--The term ``controlled group'' 
            has the meaning given to such term by subsection (a) of 
            section 1563 of such Code; except that for such purposes the 
            phrase ``more than 50 percent'' shall be substituted for the 
            phrase ``at least 80 percent'' each place it appears in such 
            subsection.
            (B) Nonincorporated persons under common control.--Under 
        regulations prescribed by the Secretary, principles similar to 
        the principles of subparagraph (A) shall apply to a group of 
        persons under common control where 1 or more of such persons is 
        not a corporation.
    (f) Other law applicable.--All provisions of law, including 
penalties, applicable with respect to the taxes imposed by section 4091 
of such Code shall, insofar as applicable and not inconsistent with the 
provisions of this section, apply with respect to the floor stock taxes 
imposed by subsection (a) to the same extent as if such taxes were 
imposed by such section 4091.

                      PART V--COMPLIANCE PROVISIONS

SEC. 13251. MODIFICATIONS TO SUBSTANTIAL UNDERSTATEMENT PENALTY.
    (a) Reasonable Basis Required.--Clause (ii) of section 6662(d)(2)(B) 
(relating to reduction for understatement due to position of taxpayer or 
disclosed item) is amended to read as follows:
                ``(ii) any item if--

                    ``(I) the relevant facts affecting the item's tax 
                treatment are adequately disclosed in the return or in a 
                statement attached to the return, and
                    ``(II) there is a reasonable basis for the tax 
                treatment of such item by the taxpayer.''

    (b) Effective Date.--The amendment made by this section shall apply 
to returns the due dates for which (determined without regard to 
extensions) are after December 31, 1993.
SEC. 13252. RETURNS RELATING TO THE CANCELLATION OF INDEBTEDNESS BY 
CERTAIN FINANCIAL ENTITIES.
    (a) In General.--Subpart B of part III of subchapter A of chapter 61 
(relating to information concerning transactions with other persons) is 
amended by adding at the end thereof the following new section:
``SEC. 6050P. RETURNS RELATING TO THE CANCELLATION OF INDEBTEDNESS BY 
CERTAIN FINANCIAL ENTITIES.
    ``(a) In General.--Any applicable financial entity which discharges 
(in whole or in part) the indebtedness of any person during any calendar 
year shall make a return (at such time and in such form as the Secretary 
may by regulations prescribe) setting forth--
        ``(1) the name, address, and TIN of each person whose 
    indebtedness was discharged during such calendar year,
        ``(2) the date of the discharge and the amount of the 
    indebtedness discharged, and
        ``(3) such other information as the Secretary may prescribe.
    ``(b) Exception.--Subsection (a) shall not apply to any discharge of 
less than $600.
    ``(c) Definitions and Special Rules.--For purposes of this section--
        ``(1) Applicable financial entity.--The term `applicable 
    financial entity' means--
            ``(A) any financial institution described in section 581 or 
        591(a) and any credit union,
            ``(B) the Federal Deposit Insurance Corporation, the 
        Resolution Trust Corporation, the National Credit Union 
        Administration, and any other Federal executive agency (as 
        defined in section 6050M), and any successor or subunit of any 
        of the foregoing, and
            ``(C) any other corporation which is a direct or indirect 
        subsidiary of an entity referred to in subparagraph (A) but only 
        if, by virtue of being affiliated with such entity, such other 
        corporation is subject to supervision and examination by a 
        Federal or State agency which regulates entities referred to in 
        subparagraph (A).
        ``(2) Governmental units.--In the case of an entity described in 
    paragraph (1)(B), any return under this section shall be made by the 
    officer or employee appropriately designated for the purpose of 
    making such return.
    ``(d) Statements To Be Furnished to Persons With Respect to Whom 
Information Is Required To Be Furnished.--Every applicable financial 
entity required to make a return under subsection (a) shall furnish to 
each person whose name is required to be set forth in such return a 
written statement showing--
        ``(1) the name and address of the entity required to make such 
    return, and
        ``(2) the information required to be shown on the return with 
    respect to such person.
The written statement required under the preceding sentence shall be 
furnished to the person on or before January 31 of the year following 
the calendar year for which the return under subsection (a) was made.''
    (b) Penalties.--
        (1) Returns.--Subparagraph (B) of section 6724(d)(1) is amended 
    by inserting after clause (vii) the following new clause (and by 
    redesignating the following clauses accordingly):
                ``(viii) section 6050P (relating to returns relating to 
            the cancellation of indebtedness by certain financial 
            entities),''.
        (2) Statements.--Paragraph (2) of section 6724(d) is amended by 
    redesignating subparagraphs (P) through (S) as subparagraphs (Q) 
    through (T), respectively, and by inserting after subparagraph (O) 
    the following new subparagraph:
            ``(P) section 6050P(d) (relating to returns relating to the 
        cancellation of indebtedness by certain financial entities),''.
    (c) Clerical Amendment.--The table of sections for subpart B of part 
III of subchapter A of chapter 61 is amended by adding at the end 
thereof the following new item:
        ``Sec. 6050P. Returns relating to the cancellation of 
                  indebtedness by certain financial entities.''

    (d) Effective Date.--
        (1) In general.--Except as provided in paragraph (2), the 
    amendments made by this section shall apply to discharges of 
    indebtedness after December 31, 1993.
        (2) Governmental entities.--In the case of an entity referred to 
    in section 6050P(c)(1)(B) of the Internal Revenue Code of 1986 (as 
    added by this section), the amendments made by this section shall 
    apply to discharges of indebtedness after the date of the enactment 
    of this Act.

                    PART VI--TREATMENT OF INTANGIBLES

SEC. 13261. AMORTIZATION OF GOODWILL AND CERTAIN OTHER INTANGIBLES.
    (a) General Rule.--Part VI of subchapter B of chapter 1 (relating to 
itemized deductions for individuals and corporations) is amended by 
adding at the end thereof the following new section:
``SEC. 197. AMORTIZATION OF GOODWILL AND CERTAIN OTHER INTANGIBLES.
    ``(a) General Rule.--A taxpayer shall be entitled to an amortization 
deduction with respect to any amortizable section 197 intangible. The 
amount of such deduction shall be determined by amortizing the adjusted 
basis (for purposes of determining gain) of such intangible ratably over 
the 15-year period beginning with the month in which such intangible was 
acquired.
    ``(b) No Other Depreciation or Amortization Deduction Allowable.--
Except as provided in subsection (a), no depreciation or amortization 
deduction shall be allowable with respect to any amortizable section 197 
intangible.
    ``(c) Amortizable Section 197 Intangible.--For purposes of this 
section--
        ``(1) In general.--Except as otherwise provided in this section, 
    the term `amortizable section 197 intangible' means any section 197 
    intangible--
            ``(A) which is acquired by the taxpayer after the date of 
        the enactment of this section, and
            ``(B) which is held in connection with the conduct of a 
        trade or business or an activity described in section 212.
        ``(2) Exclusion of self-created intangibles, etc.--The term 
    `amortizable section 197 intangible' shall not include any section 
    197 intangible--
            ``(A) which is not described in subparagraph (D), (E), or 
        (F) of subsection (d)(1), and
            ``(B) which is created by the taxpayer.
    This paragraph shall not apply if the intangible is created in 
    connection with a transaction (or series of related transactions) 
    involving the acquisition of assets constituting a trade or business 
    or substantial portion thereof.
        ``(3) Anti-churning rules.--
            ``For exclusion of intangibles acquired in certain 
        transactions, see subsection (f)(9).

    ``(d) Section 197 Intangible.--For purposes of this section--
        ``(1) In general.--Except as otherwise provided in this section, 
    the term `section 197 intangible' means--
            ``(A) goodwill,
            ``(B) going concern value,
            ``(C) any of the following intangible items:
                ``(i) workforce in place including its composition and 
            terms and conditions (contractual or otherwise) of its 
            employment,
                ``(ii) business books and records, operating systems, or 
            any other information base (including lists or other 
            information with respect to current or prospective 
            customers),
                ``(iii) any patent, copyright, formula, process, design, 
            pattern, knowhow, format, or other similar item,
                ``(iv) any customer-based intangible,
                ``(v) any supplier-based intangible, and
                ``(vi) any other similar item,
            ``(D) any license, permit, or other right granted by a 
        governmental unit or an agency or instrumentality thereof,
            ``(E) any covenant not to compete (or other arrangement to 
        the extent such arrangement has substantially the same effect as 
        a covenant not to compete) entered into in connection with an 
        acquisition (directly or indirectly) of an interest in a trade 
        or business or substantial portion thereof, and
            ``(F) any franchise, trademark, or trade name.
        ``(2) Customer-based intangible.--
            ``(A) In general.--The term `customer-based intangible' 
        means--
                ``(i) composition of market,
                ``(ii) market share, and
                ``(iii) any other value resulting from future provision 
            of goods or services pursuant to relationships (contractual 
            or otherwise) in the ordinary course of business with 
            customers.
            ``(B) Special rule for financial institutions.--In the case 
        of a financial institution, the term `customer-based intangible' 
        includes deposit base and similar items.
        ``(3) Supplier-based intangible.--The term `supplier-based 
    intangible' means any value resulting from future acquisitions of 
    goods or services pursuant to relationships (contractual or 
    otherwise) in the ordinary course of business with suppliers of 
    goods or services to be used or sold by the taxpayer.
    ``(e) Exceptions.--For purposes of this section, the term `section 
197 intangible' shall not include any of the following:
        ``(1) Financial interests.--Any interest--
            ``(A) in a corporation, partnership, trust, or estate, or
            ``(B) under an existing futures contract, foreign currency 
        contract, notional principal contract, or other similar 
        financial contract.
        ``(2) Land.--Any interest in land.
        ``(3) Computer software.--
            ``(A) In general.--Any--
                ``(i) computer software which is readily available for 
            purchase by the general public, is subject to a nonexclusive 
            license, and has not been substantially modified, and
                ``(ii) other computer software which is not acquired in 
            a transaction (or series of related transactions) involving 
            the acquisition of assets constituting a trade or business 
            or substantial portion thereof.
            ``(B) Computer software defined.--For purposes of 
        subparagraph (A), the term `computer software' means any program 
        designed to cause a computer to perform a desired function. Such 
        term shall not include any data base or similar item unless the 
        data base or item is in the public domain and is incidental to 
        the operation of otherwise qualifying computer software.
        ``(4) Certain interests or rights acquired separately.--Any of 
    the following not acquired in a transaction (or series of related 
    transactions) involving the acquisition of assets constituting a 
    trade business or substantial portion thereof:
            ``(A) Any interest in a film, sound recording, video tape, 
        book, or similar property.
            ``(B) Any right to receive tangible property or services 
        under a contract or granted by a governmental unit or agency or 
        instrumentality thereof.
            ``(C) Any interest in a patent or copyright.
            ``(D) To the extent provided in regulations, any right under 
        a contract (or granted by a governmental unit or an agency or 
        instrumentality thereof) if such right--
                ``(i) has a fixed duration of less than 15 years, or
                ``(ii) is fixed as to amount and, without regard to this 
            section, would be recoverable under a method similar to the 
            unit-of-production method.
        ``(5) Interests under leases and debt instruments.--Any interest 
    under--
            ``(A) an existing lease of tangible property, or
            ``(B) except as provided in subsection (d)(2)(B), any 
        existing indebtedness.
        ``(6) Treatment of sports franchises.--A franchise to engage in 
    professional football, basketball, baseball, or other professional 
    sport, and any item acquired in connection with such a franchise.
        ``(7) Mortgage servicing.--Any right to service indebtedness 
    which is secured by residential real property unless such right is 
    acquired in a transaction (or series of related transactions) 
    involving the acquisition of assets (other than rights described in 
    this paragraph) constituting a trade or business or substantial 
    portion thereof.
        ``(8) Certain transaction costs.--Any fees for professional 
    services, and any transaction costs, incurred by parties to a 
    transaction with respect to which any portion of the gain or loss is 
    not recognized under part III of subchapter C.
    ``(f) Special Rules.--
        ``(1) Treatment of certain dispositions, etc.--
            ``(A) In general.--If there is a disposition of any 
        amortizable section 197 intangible acquired in a transaction or 
        series of related transactions (or any such intangible becomes 
        worthless) and one or more other amortizable section 197 
        intangibles acquired in such transaction or series of related 
        transactions are retained--
                ``(i) no loss shall be recognized by reason of such 
            disposition (or such worthlessness), and
                ``(ii) appropriate adjustments to the adjusted bases of 
            such retained intangibles shall be made for any loss not 
            recognized under clause (i).
            ``(B) Special rule for covenants not to compete.--In the 
        case of any section 197 intangible which is a covenant not to 
        compete (or other arrangement) described in subsection 
        (d)(1)(E), in no event shall such covenant or other arrangement 
        be treated as disposed of (or becoming worthless) before the 
        disposition of the entire interest described in such subsection 
        in connection with which such covenant (or other arrangement) 
        was entered into.
            ``(C) Special rule.--All persons treated as a single 
        taxpayer under section 41(f)(1) shall be so treated for purposes 
        of this paragraph.
        ``(2) Treatment of certain transfers.--
            ``(A) In general.--In the case of any section 197 intangible 
        transferred in a transaction described in subparagraph (B), the 
        transferee shall be treated as the transferor for purposes of 
        applying this section with respect to so much of the adjusted 
        basis in the hands of the transferee as does not exceed the 
        adjusted basis in the hands of the transferor.
            ``(B) Transactions covered.--The transactions described in 
        this subparagraph are--
                ``(i) any transaction described in section 332, 351, 
            361, 721, 731, 1031, or 1033, and
                ``(ii) any transaction between members of the same 
            affiliated group during any taxable year for which a 
            consolidated return is made by such group.
        ``(3) Treatment of amounts paid pursuant to covenants not to 
    compete, etc.--Any amount paid or incurred pursuant to a covenant or 
    arrangement referred to in subsection (d)(1)(E) shall be treated as 
    an amount chargeable to capital account.
        ``(4) Treatment of franchises, etc.--
            ``(A) Franchise.--The term `franchise' has the meaning given 
        to such term by section 1253(b)(1).
            ``(B) Treatment of renewals.--Any renewal of a franchise, 
        trademark, or trade name (or of a license, a permit, or other 
        right referred to in subsection (d)(1)(D)) shall be treated as 
        an acquisition. The preceding sentence shall only apply with 
        respect to costs incurred in connection with such renewal.
            ``(C) Certain amounts not taken into account.--Any amount to 
        which section 1253(d)(1) applies shall not be taken into account 
        under this section.
        ``(5) Treatment of certain reinsurance transactions.--In the 
    case of any amortizable section 197 intangible resulting from an 
    assumption reinsurance transaction, the amount taken into account as 
    the adjusted basis of such intangible under this section shall be 
    the excess of--
            ``(A) the amount paid or incurred by the acquirer under the 
        assumption reinsurance transaction, over
            ``(B) the amount required to be capitalized under section 
        848 in connection with such transaction.
    Subsection (b) shall not apply to any amount required to be 
    capitalized under section 848.
        ``(6) Treatment of certain subleases.--For purposes of this 
    section, a sublease shall be treated in the same manner as a lease 
    of the underlying property involved.
        ``(7) Treatment as depreciable.--For purposes of this chapter, 
    any amortizable section 197 intangible shall be treated as property 
    which is of a character subject to the allowance for depreciation 
    provided in section 167.
        ``(8) Treatment of certain increments in value.--This section 
    shall not apply to any increment in value if, without regard to this 
    section, such increment is properly taken into account in 
    determining the cost of property which is not a section 197 
    intangible.
        ``(9) Anti-churning rules.--For purposes of this section--
            ``(A) In general.--The term `amortizable section 197 
        intangible' shall not include any section 197 intangible which 
        is described in subparagraph (A) or (B) of subsection (d)(1) (or 
        for which depreciation or amortization would not have been 
        allowable but for this section) and which is acquired by the 
        taxpayer after the date of the enactment of this section, if--
                ``(i) the intangible was held or used at any time on or 
            after July 25, 1991, and on or before such date of enactment 
            by the taxpayer or a related person,
                ``(ii) the intangible was acquired from a person who 
            held such intangible at any time on or after July 25, 1991, 
            and on or before such date of enactment, and, as part of the 
            transaction, the user of such intangible does not change, or
                ``(iii) the taxpayer grants the right to use such 
            intangible to a person (or a person related to such person) 
            who held or used such intangible at any time on or after 
            July 25, 1991, and on or before such date of enactment.
        For purposes of this subparagraph, the determination of whether 
        the user of property changes as part of a transaction shall be 
        determined in accordance with regulations prescribed by the 
        Secretary. For purposes of this subparagraph, deductions 
        allowable under section 1253(d) shall be treated as deductions 
        allowable for amortization.
            ``(B) Exception where gain recognized.--If--
                ``(i) subparagraph (A) would not apply to an intangible 
            acquired by the taxpayer but for the last sentence of 
            subparagraph (C)(i), and
                ``(ii) the person from whom the taxpayer acquired the 
            intangible elects, notwithstanding any other provision of 
            this title--

                    ``(I) to recognize gain on the disposition of the 
                intangible, and
                    ``(II) to pay a tax on such gain which, when added 
                to any other income tax on such gain under this title, 
                equals such gain multiplied by the highest rate of 
                income tax applicable to such person under this title,

            then subparagraph (A) shall apply to the intangible only to 
            the extent that the taxpayer's adjusted basis in the 
            intangible exceeds the gain recognized under clause (ii)(I).
            ``(C) Related person defined.--For purposes of this 
        paragraph--
                ``(i) Related person.--A person (hereinafter in this 
            paragraph referred to as the `related person') is related to 
            any person if--

                    ``(I) the related person bears a relationship to 
                such person specified in section 267(b) or section 
                707(b)(1), or
                    ``(II) the related person and such person are 
                engaged in trades or businesses under common control 
                (within the meaning of subparagraphs (A) and (B) of 
                section 41(f)(1)).

            For purposes of subclause (I), in applying section 267(b) or 
            707(b)(1), `20 percent' shall be substituted for `50 
            percent'.
                ``(ii) Time for making determination.--A person shall be 
            treated as related to another person if such relationship 
            exists immediately before or immediately after the 
            acquisition of the intangible involved.
            ``(D) Acquisitions by reason of death.--Subparagraph (A) 
        shall not apply to the acquisition of any property by the 
        taxpayer if the basis of the property in the hands of the 
        taxpayer is determined under section 1014(a).
            ``(E) Special rule for partnerships.--With respect to any 
        increase in the basis of partnership property under section 732, 
        734, or 743, determinations under this paragraph shall be made 
        at the partner level and each partner shall be treated as having 
        owned and used such partner's proportionate share of the 
        partnership assets.
            ``(F) Anti-abuse rules.--The term `amortizable section 197 
        intangible' does not include any section 197 intangible acquired 
        in a transaction, one of the principal purposes of which is to 
        avoid the requirement of subsection (c)(1) that the intangible 
        be acquired after the date of the enactment of this section or 
        to avoid the provisions of subparagraph (A).
    ``(g) Regulations.--The Secretary shall prescribe such regulations 
as may be appropriate to carry out the purposes of this section, 
including such regulations as may be appropriate to prevent avoidance of 
the purposes of this section through related persons or otherwise.''
    (b) Modifications to Depreciation Rules.--
        (1) Treatment of certain property excluded from section 197.--
    Section 167 (relating to depreciation deduction) is amended by 
    redesignating subsection (f) as subsection (g) and by inserting 
    after subsection (e) the following new subsection:
    ``(f) Treatment of Certain Property Excluded From Section 197.--
        ``(1) Computer software.--
            ``(A) In general.--If a depreciation deduction is allowable 
        under subsection (a) with respect to any computer software, such 
        deduction shall be computed by using the straight line method 
        and a useful life of 36 months.
            ``(B) Computer software.--For purposes of this section, the 
        term `computer software' has the meaning given to such term by 
        section 197(e)(3)(B); except that such term shall not include 
        any such software which is an amortizable section 197 
        intangible.
        ``(2) Certain interests or rights acquired separately.--If a 
    depreciation deduction is allowable under subsection (a) with 
    respect to any property described in subparagraph (B), (C), or (D) 
    of section 197(e)(4), such deduction shall be computed in accordance 
    with regulations prescribed by the Secretary.
        ``(3) Mortgage servicing rights.--If a depreciation deduction is 
    allowable under subsection (a) with respect to any right described 
    in section 197(e)(7), such deduction shall be computed by using the 
    straight line method and a useful life of 108 months.''
        (2) Allocation of basis in case of leased property.--Subsection 
    (c) of section 167 is amended to read as follows:
    ``(c) Basis for Depreciation.--
        ``(1) In general.--The basis on which exhaustion, wear and tear, 
    and obsolescence are to be allowed in respect of any property shall 
    be the adjusted basis provided in section 1011, for the purpose of 
    determining the gain on the sale or other disposition of such 
    property.
        ``(2) Special rule for property subject to lease.--If any 
    property is acquired subject to a lease--
            ``(A) no portion of the adjusted basis shall be allocated to 
        the leasehold interest, and
            ``(B) the entire adjusted basis shall be taken into account 
        in determining the depreciation deduction (if any) with respect 
        to the property subject to the lease.''
    (c) Amendments to Section 1253.--Subsection (d) of section 1253 is 
amended by striking paragraphs (2), (3), (4), and (5) and inserting the 
following:
        ``(2) Other payments.--Any amount paid or incurred on account of 
    a transfer, sale, or other disposition of a franchise, trademark, or 
    trade name to which paragraph (1) does not apply shall be treated as 
    an amount chargeable to capital account.
        ``(3) Renewals, etc.--For purposes of determining the term of a 
    transfer agreement under this section, there shall be taken into 
    account all renewal options (and any other period for which the 
    parties reasonably expect the agreement to be renewed).''
    (d) Amendment to Section 848.--Subsection (g) of section 848 is 
amended by striking ``this section'' and inserting ``this section or 
section 197''.
    (e) Amendments to Section 1060.--
        (1) Paragraph (1) of section 1060(b) is amended by striking 
    ``goodwill or going concern value'' and inserting ``section 197 
    intangibles''.
        (2) Paragraph (1) of section 1060(d) is amended by striking 
    ``goodwill or going concern value (or similar items)'' and inserting 
    ``section 197 intangibles''.
    (f) Technical and Conforming Amendments.--
        (1) Subsection (g) of section 167 (as redesignated by subsection 
    (b)) is amended to read as follows:
    ``(g) Cross References.--
            ``(1) For additional rule applicable to depreciation of 
        improvements in the case of mines, oil and gas wells, other 
        natural deposits, and timber, see section 611.
            ``(2) For amortization of goodwill and certain other 
        intangibles, see section 197.''

        (2) Subsection (f) of section 642 is amended by striking 
    ``section 169'' and inserting ``sections 169 and 197''.
        (3) Subsection (a) of section 1016 is amended by striking 
    paragraph (19) and by redesignating the following paragraphs 
    accordingly.
        (4) Subparagraph (C) of section 1245(a)(2) is amended by 
    striking ``193, or 1253(d) (2) or (3)'' and inserting ``or 193''.
        (5) Paragraph (3) of section 1245(a) is amended by striking 
    ``section 185 or 1253(d) (2) or (3)''.
        (6) The table of sections for part VI of subchapter B of chapter 
    1 is amended by adding at the end thereof the following new item:
        ``Sec. 197. Amortization of goodwill and certain other 
                  intangibles.''.

    (g) Effective Date.--
        (1) In general.--Except as otherwise provided in this 
    subsection, the amendments made by this section shall apply with 
    respect to property acquired after the date of the enactment of this 
    Act.
        (2) Election to have amendments apply to property acquired after 
    july 25, 1991.--
            (A) In general.--If an election under this paragraph applies 
        to the taxpayer--
                (i) the amendments made by this section shall apply to 
            property acquired by the taxpayer after July 25, 1991,
                (ii) subsection (c)(1)(A) of section 197 of the Internal 
            Revenue Code of 1986 (as added by this section) (and so much 
            of subsection (f)(9)(A) of such section 197 as precedes 
            clause (i) thereof) shall be applied with respect to the 
            taxpayer by treating July 25, 1991, as the date of the 
            enactment of such section, and
                (iii) in applying subsection (f)(9) of such section, 
            with respect to any property acquired by the taxpayer on or 
            before the date of the enactment of this Act, only holding 
            or use on July 25, 1991, shall be taken into account.
            (B) Election.--An election under this paragraph shall be 
        made at such time and in such manner as the Secretary of the 
        Treasury or his delegate may prescribe. Such an election by any 
        taxpayer, once made--
                (i) may be revoked only with the consent of the 
            Secretary, and
                (ii) shall apply to the taxpayer making such election 
            and any other taxpayer under common control with the 
            taxpayer (within the meaning of subparagraphs (A) and (B) of 
            section 41(f)(1) of such Code) at any time after August 2, 
            1993, and on or before the date on which such election is 
            made.
        (3) Elective binding contract exception.--
            (A) In general.--The amendments made by this section shall 
        not apply to any acquisition of property by the taxpayer if--
                (i) such acquisition is pursuant to a written binding 
            contract in effect on the date of the enactment of this Act 
            and at all times thereafter before such acquisition,
                (ii) an election under paragraph (2) does not apply to 
            the taxpayer, and
                (iii) the taxpayer makes an election under this 
            paragraph with respect to such contract.
            (B) Election.--An election under this paragraph shall be 
        made at such time and in such manner as the Secretary of the 
        Treasury or his delegate shall prescribe. Such an election, once 
        made--
                (i) may be revoked only with the consent of the 
            Secretary, and
                (ii) shall apply to all property acquired pursuant to 
            the contract with respect to which such election was made.
SEC. 13262. TREATMENT OF CERTAIN PAYMENTS TO RETIRED OR DECEASED 
PARTNER.
    (a) Section 736(b) Not To Apply in Certain Cases.--Subsection (b) of 
section 736 (relating to payments for interest in partnership) is 
amended by adding at the end thereof the following new paragraph:
        ``(3) Limitation on application of paragraph (2).--Paragraph (2) 
    shall apply only if--
            ``(A) capital is not a material income-producing factor for 
        the partnership, and
            ``(B) the retiring or deceased partner was a general partner 
        in the partnership.''
    (b) Limitation on Definition of Unrealized Receivables.--
        (1) In general.--Subsection (c) of section 751 (defining 
    unrealized receivables) is amended--
            (A) by striking ``sections 731, 736, and 741'' each place 
        they appear and inserting ``, sections 731 and 741 (but not for 
        purposes of section 736)'', and
            (B) by striking ``section 731, 736, or 741'' each place it 
        appears and inserting ``section 731 or 741''.
        (2) Technical amendments.--
            (A) Subsection (e) of section 751 is amended by striking 
        ``sections 731, 736, and 741'' and inserting ``sections 731 and 
        741''.
            (B) Section 736 is amended by striking subsection (c).
    (c) Effective Date.--
        (1) In general.--The amendments made by this section shall apply 
    in the case of partners retiring or dying on or after January 5, 
    1993.
        (2) Binding contract exception.--The amendments made by this 
    section shall not apply to any partner retiring on or after January 
    5, 1993, if a written contract to purchase such partner's interest 
    in the partnership was binding on January 4, 1993, and at all times 
    thereafter before such purchase.

                   PART VII--MISCELLANEOUS PROVISIONS

SEC. 13271. DISALLOWANCE OF INTEREST ON CERTAIN OVERPAYMENTS OF TAX.
    (a) General Rule.--Subsection (e) of section 6611 is amended to read 
as follows:
    ``(e) Disallowance of Interest on Certain Overpayments.--
        ``(1) Refunds within 45 days after return is filed.--If any 
    overpayment of tax imposed by this title is refunded within 45 days 
    after the last day prescribed for filing the return of such tax 
    (determined without regard to any extension of time for filing the 
    return) or, in the case of a return filed after such last date, is 
    refunded within 45 days after the date the return is filed, no 
    interest shall be allowed under subsection (a) on such overpayment.
        ``(2) Refunds after claim for credit or refund.--If--
            ``(A) the taxpayer files a claim for a credit or refund for 
        any overpayment of tax imposed by this title, and
            ``(B) such overpayment is refunded within 45 days after such 
        claim is filed,
    no interest shall be allowed on such overpayment from the date the 
    claim is filed until the day the refund is made.
        ``(3) IRS initiated adjustments.--If an adjustment initiated by 
    the Secretary, results in a refund or credit of an overpayment, 
    interest on such overpayment shall be computed by subtracting 45 
    days from the number of days interest would otherwise be allowed 
    with respect to such overpayment.''
    (b) Effective Dates.--
        (1) Paragraph (1) of section 6611(e) of the Internal Revenue 
    Code of 1986 (as amended by subsection (a)) shall apply in the case 
    of returns the due date for which (determined without regard to 
    extensions) is on or after January 1, 1994.
        (2) Paragraph (2) of section 6611(e) of such Code (as so 
    amended) shall apply in the case of claims for credit or refund of 
    any overpayment filed on or after January 1, 1995, regardless of the 
    taxable period to which such refund relates.
        (3) Paragraph (3) of section 6611(e) of such Code (as so 
    amended) shall apply in the case of any refund paid on or after 
    January 1, 1995, regardless of the taxable period to which such 
    refund relates.
SEC. 13272. DENIAL OF DEDUCTION RELATING TO TRAVEL EXPENSES.
    (a) In General.--Section 274(m) (relating to additional limitations 
on travel expenses) is amended by adding at the end thereof the 
following new paragraph:
        ``(3) Travel expenses of spouse, dependent, or others.--No 
    deduction shall be allowed under this chapter (other than section 
    217) for travel expenses paid or incurred with respect to a spouse, 
    dependent, or other individual accompanying the taxpayer (or an 
    officer or employee of the taxpayer) on business travel, unless--
            ``(A) the spouse, dependent, or other individual is an 
        employee of the taxpayer,
            ``(B) the travel of the spouse, dependent, or other 
        individual is for a bona fide business purpose, and
            ``(C) such expenses would otherwise be deductible by the 
        spouse, dependent, or other individual.''
    (b) Effective Date.--The amendment made by this section shall apply 
to amounts paid or incurred after December 31, 1993.
SEC. 13273. INCREASE IN WITHHOLDING FROM SUPPLEMENTAL WAGE PAYMENTS.
    If an employer elects under Treasury Regulation 31.3402 (g)-1 to 
determine the amount to be deducted and withheld from any supplemental 
wage payment by using a flat percentage rate, the rate to be used in 
determining the amount to be so deducted and withheld shall not be less 
than 28 percent. The preceding sentence shall apply to payments made 
after December 31, 1993.

     Subchapter C--Empowerment Zones, Enterprise Communities, Rural 
                   Development Investment Areas, Etc.

PART I--EMPOWERMENT ZONES, ENTERPRISE COMMUNITIES, AND RURAL DEVELOPMENT 
                            INVESTMENT AREAS

SEC. 13301. DESIGNATION AND TREATMENT OF EMPOWERMENT ZONES, ENTERPRISE 
COMMUNITIES, AND RURAL DEVELOPMENT INVESTMENT AREAS.
    (a) In General.--Chapter 1 (relating to normal taxes and surtaxes) 
is amended by inserting after subchapter T the following new subchapter:

    ``Subchapter U--Designation and Treatment of EmpowerPment Zones, 
     Enterprise Communities, and Rural Development Investment Areas

        ``Part I. Designation.
        ``Part II. Tax-exempt facility bonds for empowerment zones and 
                  enterprise communities.
        ``Part III. Additional incentives for empowerment zones.
        ``Part IV. Regulations.

                          ``PART I--DESIGNATION

        ``Sec. 1391. Designation procedure.
        ``Sec. 1392. Eligibility criteria.
        ``Sec. 1393. Definitions and special rules.

``SEC. 1391. DESIGNATION PROCEDURE.

    ``(a) In General.--From among the areas nominated for designation 
under this section, the appropriate Secretaries may designate 
empowerment zones and enterprise communities.
    ``(b) Number of Designations.--
        ``(1) Enterprise communities.--The appropriate Secretaries may 
    designate in the aggregate 95 nominated areas as enterprise 
    communities under this section, subject to the availability of 
    eligible nominated areas. Of that number, not more than 65 may be 
    designated in urban areas and not more than 30 may be designated in 
    rural areas.
        ``(2) Empowerment zones.--The appropriate Secretaries may 
    designate in the aggregate 9 nominated areas as empowerment zones 
    under this section, subject to the availability of eligible 
    nominated areas. Of that number, not more than 6 may be designated 
    in urban areas and not more than 3 may be designated in rural areas. 
    If 6 empowerment zones are designated in urban areas, no less than 1 
    shall be designated in an urban area the most populous city of which 
    has a population of 500,000 or less and no less than 1 shall be a 
    nominated area which includes areas in 2 States and which has a 
    population of 50,000 or less. The Secretary of Housing and Urban 
    Development shall designate empowerment zones located in urban areas 
    in such a manner that the aggregate population of all such zones 
    does not exceed 750,000.
    ``(c) Period Designations May Be Made.--A designation may be made 
under this section only after 1993 and before 1996.
    ``(d) Period for Which Designation Is In Effect.--
        ``(1) In general.--Any designation under this section shall 
    remain in effect during the period beginning on the date of the 
    designation and ending on the earliest of--
            ``(A) the close of the 10th calendar year beginning on or 
        after such date of designation,
            ``(B) the termination date designated by the State and local 
        governments as provided for in their nomination, or
            ``(C) the date the appropriate Secretary revokes the 
        designation.
        ``(2) Revocation of designation.--The appropriate Secretary may 
    revoke the designation under this section of an area if such 
    Secretary determines that the local government or the State in which 
    it is located--
            ``(A) has modified the boundaries of the area, or
            ``(B) is not complying substantially with, or fails to make 
        progress in achieving the benchmarks set forth in, the strategic 
        plan under subsection (f)(2).
    ``(e) Limitations on Designations.--No area may be designated under 
subsection (a) unless--
        ``(1) the area is nominated by 1 or more local governments and 
    the State or States in which it is located for designation under 
    this section,
        ``(2) such State or States and the local governments have the 
    authority--
            ``(A) to nominate the area for designation under this 
        section, and
            ``(B) to provide the assurances described in paragraph (3),
        ``(3) such State or States and the local governments provide 
    written assurances satisfactory to the appropriate Secretary that 
    the strategic plan described in the application under subsection 
    (f)(2) for such area will be implemented,
        ``(4) the appropriate Secretary determines that any information 
    furnished is reasonably accurate, and
        ``(5) such State or States and local governments certify that no 
    portion of the area nominated is already included in an empowerment 
    zone or in an enterprise community or in an area otherwise nominated 
    to be designated under this section.
    ``(f) Application.--No area may be designated under subsection (a) 
unless the application for such designation--
        ``(1) demonstrates that the nominated area satisfies the 
    eligibility criteria described in section 1392,
        ``(2) includes a strategic plan for accomplishing the purposes 
    of this subchapter that--
            ``(A) describes the coordinated economic, human, community, 
        and physical development plan and related activities proposed 
        for the nominated area,
            ``(B) describes the process by which the affected community 
        is a full partner in the process of developing and implementing 
        the plan and the extent to which local institutions and 
        organizations have contributed to the planning process,
            ``(C) identifies the amount of State, local, and private 
        resources that will be available in the nominated area and the 
        private/public partnerships to be used, which may include 
        participation by, and cooperation with, universities, medical 
        centers, and other private and public entities,
            ``(D) identifies the funding requested under any Federal 
        program in support of the proposed economic, human, community, 
        and physical development and related activities,
            ``(E) identifies baselines, methods, and benchmarks for 
        measuring the success of carrying out the strategic plan, 
        including the extent to which poor persons and families will be 
        empowered to become economically self-sufficient, and
            ``(F) does not include any action to assist any 
        establishment in relocating from one area outside the nominated 
        area to the nominated area, except that assistance for the 
        expansion of an existing business entity through the 
        establishment of a new branch, affiliate, or subsidiary is 
        permitted if--
                ``(i) the establishment of the new branch, affiliate, or 
            subsidiary will not result in a decrease in employment in 
            the area of original location or in any other area where the 
            existing business entity conducts business operations, and
                ``(ii) there is no reason to believe that the new 
            branch, affiliate, or subsidiary is being established with 
            the intention of closing down the operations of the existing 
            business entity in the area of its original location or in 
            any other area where the existing business entity conducts 
            business operation, and
        ``(3) includes such other information as may be required by the 
    appropriate Secretary.

``SEC. 1392. ELIGIBILITY CRITERIA.

    ``(a) In General.--A nominated area shall be eligible for 
designation under section 1391 only if it meets the following criteria:
        ``(1) Population.--The nominated area has a maximum population 
    of--
            ``(A) in the case of an urban area, the lesser of--
                ``(i) 200,000, or
                ``(ii) the greater of 50,000 or 10 percent of the 
            population of the most populous city located within the 
            nominated area, and
            ``(B) in the case of a rural area, 30,000.
        ``(2) Distress.--The nominated area is one of pervasive poverty, 
    unemployment, and general distress.
        ``(3) Size.--The nominated area--
            ``(A) does not exceed 20 square miles if an urban area or 
        1,000 square miles if a rural area,
            ``(B) has a boundary which is continuous, or, except in the 
        case of a rural area located in more than 1 State, consists of 
        not more than 3 noncontiguous parcels,
            ``(C)(i) in the case of an urban area, is located entirely 
        within no more than 2 contiguous States, and
            ``(ii) in the case of a rural area, is located entirely 
        within no more than 3 contiguous States, and
            ``(D) does not include any portion of a central business 
        district (as such term is used for purposes of the most recent 
        Census of Retail Trade) unless the poverty rate for each 
        population census tract in such district is not less than 35 
        percent (30 percent in the case of an enterprise community).
        ``(4) Poverty rate.--The poverty rate--
            ``(A) for each population census tract within the nominated 
        area is not less than 20 percent,
            ``(B) for at least 90 percent of the population census 
        tracts within the nominated area is not less than 25 percent, 
        and
            ``(C) for at least 50 percent of the population census 
        tracts within the nominated area is not less than 35 percent.
    ``(b) Special Rules Relating to Determination of Poverty Rate.--For 
purposes of subsection (a)(4)--
        ``(1) Treatment of census tracts with small populations.--
            ``(A) Tracts with no population.--In the case of a 
        population census tract with no population--
                ``(i) such tract shall be treated as having a poverty 
            rate which meets the requirements of subparagraphs (A) and 
            (B) of subsection (a)(4), but
                ``(ii) such tract shall be treated as having a zero 
            poverty rate for purposes of applying subparagraph (C) 
            thereof.
            ``(B) Tracts with populations of less than 2,000.--A 
        population census tract with a population of less than 2,000 
        shall be treated as having a poverty rate which meets the 
        requirements of subparagraphs (A) and (B) of subsection (a)(4) 
        if more than 75 percent of such tract is zoned for commercial or 
        industrial use.
        ``(2) Discretion to adjust requirements for enterprise 
    communities.--In determining whether a nominated area is eligible 
    for designation as an enterprise community, the appropriate 
    Secretary may, where necessary to carry out the purposes of this 
    subchapter, reduce by 5 percentage points one of the following 
    thresholds for not more than 10 percent of the population census 
    tracts (or, if fewer, 5 population census tracts) in the nominated 
    area:
            ``(A) The 20 percent threshold in subsection (a)(4)(A).
            ``(B) The 25 percent threshold in subsection (a)(4)(B).
            ``(C) The 35 percent threshold in subsection (a)(4)(C).
    If the appropriate Secretary elects to reduce the threshold under 
    subparagraph (C), such Secretary may (in lieu of applying the 
    preceding sentence) reduce by 10 percentage points the threshold 
    under subparagraph (C) for 3 population census tracts.
        ``(3) Each noncontiguous area must satisfy poverty rate rule.--A 
    nominated area may not include a noncontiguous parcel unless such 
    parcel separately meets (subject to paragraphs (1) and (2)) the 
    criteria set forth in subsection (a)(4).
        ``(4) Areas not within census tracts.--In the case of an area 
    which is not tracted for population census tracts, the equivalent 
    county divisions (as defined by the Bureau of the Census for 
    purposes of defining poverty areas) shall be used for purposes of 
    determining poverty rates.
    ``(c) Factors To Consider.--From among the nominated areas eligible 
for designation under section 1391 by the appropriate Secretary, such 
appropriate Secretary shall make designations of empowerment zones and 
enterprise communities on the basis of--
        ``(1) the effectiveness of the strategic plan submitted pursuant 
    to section 1391(f)(2) and the assurances made pursuant to section 
    1391(e)(3), and
        ``(2) criteria specified by the appropriate Secretary.

``SEC. 1393. DEFINITIONS AND SPECIAL RULES.

    ``(a) In General.--For purposes of this subchapter--
        ``(1) Appropriate secretary.--The term `appropriate Secretary' 
    means--
            ``(A) the Secretary of Housing and Urban Development in the 
        case of any nominated area which is located in an urban area, 
        and
            ``(B) the Secretary of Agriculture in the case of any 
        nominated area which is located in a rural area.
        ``(2) Rural area.--The term `rural area' means any area which 
    is--
            ``(A) outside of a metropolitan statistical area (within the 
        meaning of section 143(k)(2)(B)), or
            ``(B) determined by the Secretary of Agriculture, after 
        consultation with the Secretary of Commerce, to be a rural area.
        ``(3) Urban area.--The term `urban area' means an area which is 
    not a rural area.
        ``(4) Special rules for indian reservations.--
            ``(A) In general.--No empowerment zone or enterPprise 
        community may include any area within an Indian reservation.
            ``(B) Indian reservation defined.--The term `Indian 
        reservation' has the meaning given such term by section 
        168(j)(6).
        ``(5) Local government.--The term `local government' means--
            ``(A) any county, city, town, township, parish, village, or 
        other general purpose political subdivision of a State, and
            ``(B) any combination of political subdivisions described in 
        subparagraph (A) recognized by the appropriate Secretary.
        ``(6) Nominated area.--The term `nominated area' means an area 
    which is nominated by 1 or more local governments and the State or 
    States in which it is located for designation under section 1391.
        ``(7) Governments.--If more than 1 State or local government 
    seeks to nominate an area under this part, any reference to, or 
    requirement of, this subchapter shall apply to all such governments.
        ``(8) Special rule.--An area shall be treated as nominated by a 
    State and a local government if it is nominated by an economic 
    development corporation chartered by the State.
        ``(9) Use of census data.--Population and poverty rate shall be 
    determined by the most recent decennial census data available.
    ``(b) Empowerment Zone; Enterprise Community.--For purposes of this 
title, the terms `empowerment zone' and `enterprise community' mean 
areas designated as such under section 1391.

     ``PART II--TAX-EXEMPT FACILITY BONDS FOR EMPOWERMENT ZONES AND 
                         ENTERPRISE COMMUNITIES

        ``Sec. 1394. Tax-exempt enterprise zone facility bonds.
``SEC. 1394. TAX-EXEMPT ENTERPRISE ZONE FACILITY BONDS.
    ``(a) In General.--For purposes of part IV of subchapter B of this 
chapter (relating to tax exemption requirements for State and local 
bonds), the term `exempt facility bond' includes any bond issued as part 
of an issue 95 percent or more of the net proceeds (as defined in 
section 150(a)(3)) of which are to be used to provide any enterprise 
zone facility.
    ``(b) Enterprise Zone Facility.--For purposes of this section--
        ``(1) In general.--The term `enterprise zone facility' means any 
    qualified zone property the principal user of which is an enterprise 
    zone business, and any land which is functionally related and 
    subordinate to such property.
        ``(2) Qualified zone property.--The term `qualified zone 
    property' has the meaning given such term by section 1397C; except 
    that the references to empowerment zones shall be treated as 
    including references to enterprise communities.
        ``(3) Enterprise zone business.--The term `enterprise zone 
    business' has the meaning given to such term by section 1397B, 
    except that--
            ``(A) references to empowerment zones shall be treated as 
        including references to enterprise communities, and
            ``(B) such term includes any trades or businesses which 
        would qualify as an enterprise zone business (determined after 
        the modification of subparagraph (A)) if such trades or 
        businesses were separately incorporated.
    ``(c) Limitation on Amount of Bonds.--
        ``(1) In general.--Subsection (a) shall not apply to any issue 
    if the aggregate amount of outstanding enterprise zone facility 
    bonds allocable to any person (taking into account such issue) 
    exceeds--
            ``(A) $3,000,000 with respect to any 1 empowerment zone or 
        enterprise community, or
            ``(B) $20,000,000 with respect to all empowerment zones and 
        enterprise communities.
        ``(2) Aggregate enterprise zone facility bond benefit.--For 
    purposes of subparagraph (A), the aggregate amount of outstanding 
    enterprise zone facility bonds allocable to any person shall be 
    determined under rules similar to the rules of section 144(a)(10), 
    taking into account only bonds to which subsection (a) applies.
    ``(d) Acquisition of Land and Existing Property Permitted.--The 
requirements of sections 147(c)(1)(A) and 147(d) shall not apply to any 
bond described in subsection (a).
    ``(e) Penalty for Ceasing to Meet Requirements.--
        ``(1) Failures corrected.--An issue which fails to meet 1 or 
    more of the requirements of subsections (a) and (b) shall be treated 
    as meeting such requirements if--
            ``(A) the issuer and any principal user in good faith 
        attempted to meet such requirements, and
            ``(B) any failure to meet such requirements is corrected 
        within a reasonable period after such failure is first 
        discovered.
        ``(2) Loss of deductions where facility ceases to be 
    qualified.--No deduction shall be allowed under this chapter for 
    interest on any financing provided from any bond to which subsection 
    (a) applies with respect to any facility to the extent such interest 
    accrues during the period beginning on the first day of the calendar 
    year which includes the date on which--
            ``(A) substantially all of the facility with respect to 
        which the financing was provided ceases to be used in an 
        empowerment zone or enterprise community, or
            ``(B) the principal user of such facility ceases to be an 
        enterprise zone business (as defined in subsection (b)).
        ``(3) Exception if zone ceases.--Paragraphs (1) and (2) shall 
    not apply solely by reason of the termination or revocation of a 
    designation as an empowerment zone or an enterprise community.
        ``(4) Exception for bankruptcy.--Paragraphs (1) and (2) shall 
    not apply to any cessation resulting from bankruptcy.

         ``PART III--ADDITIONAL INCENTIVES FOR EMPOWERMENT ZONES

        ``Subpart A. Empowerment zone employment credit.
        ``Subpart B. Additional expensing.
        ``Subpart C. General provisions.

             ``Subpart A--Empowerment Zone Employment Credit

        ``Sec. 1396. Empowerment zone employment credit.
        ``Sec. 1397. Other definitions and special rules.

``SEC. 1396. EMPOWERMENT ZONE EMPLOYMENT CREDIT.

    ``(a) Amount of Credit.--For purposes of section 38, the amount of 
the empowerment zone employment credit determined under this section 
with respect to any employer for any taxable year is the applicable 
percentage of the qualified zone wages paid or incurred during the 
calendar year which ends with or within such taxable year.
    ``(b) Applicable Percentage.--For purposes of this section, the term 
`applicable percentage' means the percentage determined in accordance 
with the following table:

    ``In the case of wages paid or
                                                          The applicable
    incurred during calendar year:
                                                          percentage is:
        1994 through 2001...............................
                                                                 20    4
        2002............................................
                                                                 15    4
        2003............................................
                                                                 10    4
        2004............................................
                                                                  5    4

    ``(c) Qualified Zone Wages.--
        ``(1) In general.--For purposes of this section, the term 
    `qualified zone wages' means any wages paid or incurred byP
    an employer for services performed by an employee while such 
    employee is a qualified zone employee.
        ``(2) Only first $15,000 of wages per year taken into account.--
    With respect to each qualified zone employee, the amount of 
    qualified zone wages which may be taken into account for a calendar 
    year shall not exceed $15,000.
        ``(3) Coordination with targeted jobs credit.--
            ``(A) In general.--The term `qualified zone wages' shall not 
        include wages taken into account in determining the credit under 
        section 51.
            ``(B) Coordination with paragraph (2).--The $15,000 amount 
        in paragraph (2) shall be reduced for any calendar year by the 
        amount of wages paid or incurred during such year which are 
        taken into account in determining the credit under section 51.
    ``(d) Qualified Zone Employee.--For purposes of this section--
        ``(1) In general.--Except as otherwise provided in this 
    subsection, the term `qualified zone employee' means, with respect 
    to any period, any employee of an employer if--
            ``(A) substantially all of the services performed during 
        such period by such employee for such employer are performed 
        within an empowerment zone in a trade or business of the 
        employer, and
            ``(B) the principal place of abode of such employee while 
        performing such services is within such empowerment zone.
        ``(2) Certain individuals not eligible.--The term `qualified 
    zone employee' shall not include--
            ``(A) any individual described in subparagraph (A), (B), or 
        (C) of section 51(i)(1),
            ``(B) any 5-percent owner (as defined in section 
        416(i)(1)(B)),
            ``(C) any individual employed by the employer for less than 
        90 days,
            ``(D) any individual employed by the employer at any 
        facility described in section 144(c)(6)(B), and
            ``(E) any individual employed by the employer in a trade or 
        business the principal activity of which is farming (within the 
        meaning of subparagraph (A) or (B) of section 2032A(e)(5)), but 
        only if, as of the close of the taxable year, the sum of--
                ``(i) the aggregate unadjusted bases (or, if greater, 
            the fair market value) of the assets owned by the employer 
            which are used in such a trade or business, and
                ``(ii) the aggregate value of assets leased by the 
            employer which are used in such a trade or business (as 
            determined under regulations prescribed by the Secretary),
        exceeds $500,000.
        ``(3) Special rules related to termination of employment.--
            ``(A) In general.--Paragraph (2)(C) shall not apply to--
                ``(i) a termination of employment of an individual who 
            before the close of the period referred to in paragraph 
            (2)(C) becomes disabled to perform the services of such 
            employment unless such disability is removed before the 
            close of such period and the taxpayer fails to offer 
            reemployment to such individual, or
                ``(ii) a termination of employment of an individual if 
            it is determined under the applicable State unemployment 
            compensation law that the termination was due to the 
            misconduct of such individual.
            ``(B) Changes in form of business.--For purposes of 
        paragraph (2)(C), the employment relationship between the 
        taxpayer and an employee shall not be treated as terminated--
                ``(i) by a transaction to which section 381(a) applies 
            if the employee continues to be employed by the acquiring 
            corporation, or
                ``(ii) by reason of a mere change in the form of 
            conducting the trade or business of the taxpayer if the 
            employee continues to be employed in such trade or business 
            and the taxpayer retains a substantial interest in such 
            trade or business.

``SEC. 1397. OTHER DEFINITIONS AND SPECIAL RULES.

    ``(a) Wages.--For purposes of this subpart--
        ``(1) In general.--The term `wages' has the same meaning as when 
    used in section 51.
        ``(2) Certain training and educational benefits.--
            ``(A) In general.--The following amounts shall be treated as 
        wages paid to an employee:
                ``(i) Any amount paid or incurred by an employer which 
            is excludable from the gross income of an employee under 
            section 127, but only to the extent paid or incurred to a 
            person not related to the employer.
                ``(ii) In the case of an employee who has not attained 
            the age of 19, any amount paid or incurred by an employer 
            for any youth training program operated by such employer in 
            conjunction with local education officials.
            ``(B) Related person.--A person is related to any other 
        person if the person bears a relationship to such other person 
        specified in section 267(b) or 707(b)(1), or such person and 
        such other person are engaged in trades or businesses under 
        common control (within the meaning of subsections (a) and (b) of 
        section 52). For purposes of the preceding sentence, in applying 
        section 267(b) or 707(b)(1), `10 percent' shall be substituted 
        for `50 percent'.
    ``(b) Controlled Groups.--For purposes of this subpart--
        ``(1) all employers treated as a single employer under 
    subsection (a) or (b) of section 52 shall be treated as a single 
    employer for purposes of this subpart, and
        ``(2) the credit (if any) determined under section 1396 with 
    respect to each such employer shall be its proportionate share of 
    the wages giving rise to such credit.
    ``(c) Certain Other Rules Made Applicable.--For purposes of this 
subpart, rules similar to the rules of section 51(k) and subsections 
(c), (d), and (e) of section 52 shall apply.

                    ``Subpart B--Additional Expensing

        ``Sec. 1397A. Increase in expensing under section 179.

``SEC. 1397A. INCREASE IN EXPENSING UNDER SECTION 179.

    ``(a) General Rule.--In the case of an enterprise zone business, for 
purposes of section 179--
        ``(1) the limitation under section 179(b)(1) shall be increased 
    by the lesser of--
            ``(A) $20,000, or
            ``(B) the cost of section 179 property which is qualified 
        zone property placed in service during the taxable year, and
        ``(2) the amount taken into account under section 179(b)(2) with 
    respect to any section 179 property which is qualified zone property 
    shall be 50 percent of the cost thereof.
    ``(b) Recapture.--Rules similar to the rules under section 
179(d)(10) shall apply with respect to any qualified zone property which 
ceases to be used in an empowerment zone by an enterprise zone business.

                     ``Subpart C--General Provisions

        ``Sec. 1397B. Enterprise zone business defined.
        ``Sec. 1397C. Qualified zone property defined.

``SEC. 1397B. ENTERPRISE ZONE BUSINESS DEFINED.

    ``(a) In General.--For purposes of this part, the term `enterprise 
zone business' means--
        ``(1) any qualified business entity, and
        ``(2) any qualified proprietorship.
    ``(b) Qualified Business Entity.--For purposes of this section, the 
term `qualified business entity' means, with respect to any taxable 
year, any corporation or partnership if for such year--
        ``(1) every trade or business of such entity is the active 
    conduct of a qualified business within an empowerment zone,
        ``(2) at least 80 percent of the total gross income of such 
    entity is derived from the active conduct of such business,
        ``(3) substantially all of the use of the tangible property of 
    such entity (whether owned or leased) is within an empowerment zone,
        ``(4) substantially all of the intangible property of such 
    entity is used in, and exclusively related to, the active conduct of 
    any such business,
        ``(5) substantially all of the services performed for such 
    entity by its employees are performed in an empowerment zone,
        ``(6) at least 35 percent of its employees are residents of an 
    empowerment zone,
        ``(7) less than 5 percent of the average of the aggregate 
    unadjusted bases of the property of such entity is attributable to 
    collectibles (as defined in section 408(m)(2)) other than 
    collectibles that are held primarily for sale to customers in the 
    ordinary course of such business, and
        ``(8) less than 5 percent of the average of the aggregate 
    unadjusted bases of the property of such entity is attributable to 
    nonqualified financial property.
    ``(c) Qualified Proprietorship.--For purposes of this section, the 
term `qualified proprietorship' means, with respect to any taxable year, 
any qualified business carried on by an individual as a proprietorship 
if for such year--
        ``(1) at least 80 percent of the total gross income of such 
    individual from such business is derived from the active conduct of 
    such business in an empowerment zone,
        ``(2) substantially all of the use of the tangible property of 
    such individual in such business (whether owned or leased) is within 
    an empowerment zone,
        ``(3) substantially all of the intangible property of such 
    business is used in, and exclusively related to, the active conduct 
    of such business,
        ``(4) substantially all of the services performed for such 
    individual in such business by employees of such business are 
    performed in an empowerment zone,
        ``(5) at least 35 percent of such employees are residents of an 
    empowerment zone,
        ``(6) less than 5 percent of the average of the aggregate 
    unadjusted bases of the property of such individual which is used in 
    such business is attributable to collectibles (as defined in section 
    408(m)(2)) other than collectibles that are held primarily for sale 
    to customers in the ordinary course of such business, and
        ``(7) less than 5 percent of the average of the aggregate 
    unadjusted bases of the property of such individual which is used in 
    such business is attributable to nonqualified financial property.
For purposes of this subsection, the term `employee' includes the 
proprietor.
    ``(d) Qualified Business.--For purposes of this section--
        ``(1) In general.--Except as otherwise provided in this 
    subsection, the term `qualified business' means any trade or 
    business.
        ``(2) Rental of real property.--The rental to others of real 
    property located in an empowerment zone shall be treated as a 
    qualified business if and only if--
            ``(A) the property is not residential rental property (as 
        defined in section 168(e)(2)), and
            ``(B) at least 50 percent of the gross rental income from 
        the real property is from enterprise zone businesses.
        ``(3) Rental of tangible personal property.--The rental to 
    others of tangible personal property shall be treated as a qualified 
    business if and only if substantially all of the rental of such 
    property is by enterprise zone businesses or by residents of an 
    empowerment zone.
        ``(4) Treatment of business holding intangibles.--The term 
    `qualified business' shall not include any trade or business 
    consisting predominantly of the development or holding of 
    intangibles for sale or license.
        ``(5) Certain businesses excluded.--The term `qualified 
    business' shall not include--
            ``(A) any trade or business consisting of the operation of 
        any facility described in section 144(c)(6)(B), and
            ``(B) any trade or business the principal activity of which 
        is farming (within the meaning of subparagraphs (A) or (B) of 
        section 2032A(e)(5)), but only if, as of the close of the 
        preceding taxable year, the sum of--
                ``(i) the aggregate unadjusted bases (or, if greater, 
            the fair market value) of the assets owned by the taxpayer 
            which are used in such a trade or business, and
                ``(ii) the aggregate value of assets leased by the 
            taxpayer which are used in such a trade or business,
        exceeds $500,000.
    For purposes of subparagraph (B), rules similar to the rules of 
    section 1397(b) shall apply.
    ``(e) Nonqualified Financial Property.--For purposes of this 
section, the term `nonqualified financial property' means debt, stock, 
partnership interests, options, futures contracts, forward contracts, 
warrants, notional principal contracts, annuities, and other similar 
property specified in regulations; except that such term shall not 
include--
        ``(1) reasonable amounts of working capital held in cash, cash 
    equivalents, or debt instruments with a term of 18 months or less, 
    or
        ``(2) debt instruments described in section 1221(4).

``SEC. 1397C. QUALIFED ZONE PROPERTY DEFINED.

    ``(a) General Rule.--For purposes of this part--
        ``(1) In general.--The term `qualified zone property' means any 
    property to which section 168 applies (or would apply but for 
    section 179) if--
            ``(A) such property was acquired by the taxpayer by purchase 
        (as defined in section 179(d)(2)) after the date on which the 
        designation of the empowerment zone took effect,
            ``(B) the original use of which in an empowerment zone 
        commences with the taxpayer, and
            ``(C) substantially all of the use of which is in an 
        empowerment zone and is in the active conduct of a qualified 
        business by the taxpayer in such zone.
        ``(2) Special rule for substantial renovations.--In the case of 
    any property which is substantially renovated by the taxpayer, the 
    requirements of subparagraphs (A) and (B) of paragraph (1) shall be 
    treated as satisfied. For purposes of the preceding sentence, 
    property shall be treated as substantially renovated by the taxpayer 
    if, during any 24-month period beginning after the date on which the 
    designation of the empowerment zone took effect, additions to basis 
    with respect to such property in the hands of the taxpayer exceed 
    the greater of (i) an amount equal to the adjusted basis at the 
    beginning of such 24-month period in the hands of the taxpayer, or 
    (ii) $5,000.
    ``(b) Special Rules for Sale-Leasebacks.--For purposes of subsection 
(a)(1)(B), if property is sold and leased back by the taxpayer within 3 
months after the date such property was originally placed in service, 
such property shall be treated as originally placed in service not 
earlier than the date on which such property is used under the 
leaseback.

                         ``PART IV--REGULATIONS

        ``Sec. 1397D. Regulations.

``SEC. 1397D. REGULATIONS.

    ``The Secretary shall prescribe such regulations as may be necessary 
or appropriate to carry out the purposes of parts II and III, 
including--
        ``(1) regulations limiting the benefit of parts II and III in 
    circumstances where such benefits, in combination with benefits 
    provided under other Federal programs, would result in an activity 
    being 100 percent or more subsidized by the Federal Government,
        ``(2) regulations preventing abuse of the provisions of parts II 
    and III, and
        ``(3) regulations dealing with inadvertent failures of entities 
    to be enterprise zone businesses.''
    (b) Clerical Amendment.--The table of subchapters for chapter 1 is 
amended by inserting after the item relating to subchapter T the 
following new item:
        ``Subchapter U. Designation and treatment of empowerment zones, 
                  enterprise communities, and rural development 
                  investment areas.''

SEC. 13302. TECHNICAL AND CONFORMING AMENDMENTS.

    (a) Empowerment Zone Employment Credit Part of General Business 
Credit.--
        (1) Subsection (b) of section 38 (relating to current year 
    business credit) is amended by striking ``plus'' at the end of 
    paragraph (7), by striking the period at the end of paragraph (8) 
    and inserting ``, and'', and by adding at the end the following new 
    paragraph:
        ``(9) the empowerment zone employment credit determined under 
    section 1396(a).''
        (2) Subsection (d) of section 39 is amended by adding at the end 
    the following new paragraph:
        ``(4) Empowerment zone employment credit.--No portion of the 
    unused business credit which is attributable to the credit 
    determined under section 1396 (relating to empowerment zone 
    employment credit) may be carried to any taxable year ending before 
    January 1, 1994.''
    (b) Denial of Deduction for Portion of Wages Equal to Empowerment 
Zone Employment Credit.--
        (1) Subsection (a) of section 280C (relating to rule for 
    targeted jobs credit) is amended--
            (A) by striking ``the amount of the credit determined for 
        the taxable year under section 51(a)'' and inserting ``the sum 
        of the credits determined for the taxable year under sections 
        51(a) and 1396(a)'', and
            (B) by striking ``Targeted Jobs Credit'' in the subsection 
        heading and inserting ``Employment Credits''.
        (2) Subsection (c) of section 196 (relating to deduction for 
    certain unused business credits) is amended by striking ``and'' at 
    the end of paragraph (4), by striking the period at the end of 
    paragraph (5) and inserting ``, and'', and by adding at the end the 
    following new paragraph:
        ``(6) the empowerment zone employment credit determined under 
    section 1396(a).''
    (c) Empowerment Zone Employment Credit May Offset 25 Percent of 
Minimum Tax.--
        (1) In general.--Section 38(c) (relating to limitation based on 
    amount of tax) is amended by redesignating paragraph (2) as 
    paragraph (3) and by inserting after paragraph (1) the following new 
    paragraph:
        ``(2) Empowerment zone employment credit may offset 25 percent 
    of minimum tax.--
            ``(A) In general.--In the case of the empowerment zone 
        employment credit credit--
                ``(i) this section and section 39 shall be applied 
            separately with respect to such credit, and
                ``(ii) for purposes of applying paragraph (1) to such 
            credit--

                    ``(I) 75 percent of the tentative minimum tax shall 
                be substituted for the tentative minimum tax under 
                subparagraph (A) thereof, and
                    ``(II) the limitation under paragraph (1) (as 
                modified by subclause (I)) shall be reduced by the 
                credit allowed under subsection (a) for the taxable year 
                (other than the empowerment zone employment credit).

            ``(B) Empowerment zone employment credit.--For purposes of 
        this paragraph, the term `empowerment zone employment credit' 
        means the portion of the credit under subsection (a) which is 
        attributable to the credit determined under section 1396 
        (relating to empowerment zone employment credit).''
    (d) Amendment of Targeted Jobs Credit.--Subparagraph (A) of section 
51(i)(1) is amended by inserting ``, or, if the taxpayer is an entity 
other than a corporation, to any individual who owns, directly or 
indirectly, more than 50 percent of the capital and profits interests in 
the entity,'' after ``of the corporation''.
    (e) Carryovers.--Subsection (c) of section 381 (relating to 
carryovers in certain corporate acquisitions) is amended by adding at 
the end the following new paragraph:
        ``(26) Enterprise zone provisions.--The acquiring corporation 
    shall take into account (to the extent proper to carry out the 
    purposes of this section and subchapter U, and under such 
    regulations as may be prescribed by the Secretary) the items 
    required to be taken into account for purposes of subchapter U in 
    respect of the distributor or transferor corporation.''
SEC. 13303. EFFECTIVE DATE.
    The amendments made by this part shall take effect on the date of 
the enactment of this Act.

   PART II--CREDIT FOR CONTRIBUTIONS TO CERTAIN COMMUNITY DEVELOPMENT 
                              CORPORATIONS

SEC. 13311. CREDIT FOR CONTRIBUTIONS TO CERTAIN COMMUNITY DEVELOPMENT 
CORPORATIONS.
    (a) In General.--For purposes of section 38 of the Internal Revenue 
Code of 1986, the current year business credit shall include the credit 
determined under this section.
    (b) Determination of Credit.--The credit determined under this 
section for each taxable year in the credit period with respect to any 
qualified CDC contribution made by the taxpayer is an amount equal to 5 
percent of such contribution.
    (c) Credit Period.--For purposes of this section, the credit period 
with respect to any qualified CDC contribution is the period of 10 
taxable years beginning with the taxable year during which such 
contribution was made.
    (d) Qualified CDC Contribution.--For purposes of this section--
        (1) In general.--The term ``qualified CDC contribution'' means 
    any transfer of cash--
            (A) which is made to a selected community development 
        corporation during the 5-year period beginning on the date such 
        corporation was selected for purposes of this section,
            (B) the amount of which is available for use by such 
        corporation for at least 10 years,
            (C) which is to be used by such corporation for qualified 
        low-income assistance within its operational area, and
            (D) which is designated by such corporation for purposes of 
        this section.
        (2) Limitations on amount designated.--The aggregate amount of 
    contributions to a selected community development corporation which 
    may be designated by such corporation shall not exceed $2,000,000.
    (e) Selected Community Development Corporations.--
        (1) In general.--For purposes of this section, the term 
    ``selected community development corporation'' means any 
    corporation--
            (A) which is described in section 501(c)(3) of such Code and 
        exempt from tax under section 501(a) of such Code,
            (B) the principal purposes of which include promoting 
        employment of, and business opportunities for, low-income 
        individuals who are residents of the operational area, and
            (C) which is selected by the Secretary of Housing and Urban 
        Development for purposes of this section.
        (2) Only 20 corporations may be selected.--The Secretary of 
    Housing and Urban Development may select 20 corporations for 
    purposes of this section, subject to the availability of eligible 
    corporations. Such selections may be made only before July 1, 1994. 
    At least 8 of the operational areas of the corporations selected 
    must be rural areas (as defined by section 1393(a)(3) of such Code).
        (3) Operational areas must have certain characteristics.--A 
    corporation may be selected for purposes of this section only if its 
    operational area meets the following criteria:
            (A) The area meets the size requirements under section 
        1392(a)(3).
            (B) The unemployment rate (as determined by the appropriate 
        available data) is not less than the national unemployment rate.
            (C) The median family income of residents of such area does 
        not exceed 80 percent of the median gross income of residents of 
        the jurisdiction of the local government which includes such 
        area.
    (f) Qualified Low-Income Assistance.--For purposes of this section, 
the term ``qualified low-income assistance'' means assistance--
        (1) which is designed to provide employment of, and business 
    opportunities for, low-income individuals who are residents of the 
    operational area of the community development corporation, and
        (2) which is approved by the Secretary of Housing and Urban 
    Development.

               Part III--Investment in Indian Reservations

SEC. 13321. ACCELERATED DEPRECIATION FOR PROPERTY ON INDIAN 
RESERVATIONS.
    (a) In General.--Section 168 is amended by adding at the end the 
following new subsection:
    ``(j) Property on Indian Reservations.--
        ``(1) In general.--For purposes of subsection (a), the 
    applicable recovery period for qualified Indian reservation property 
    shall be determined in accordance with the table contained in 
    paragraph (2) in lieu of the table contained in subsection (c).
        ``(2) Applicable recovery period for indian reservation 
    property.--For purposes of paragraph (1)--
                                                          The applicable
    ``In the case of:
                                                     recovery period is:
        3-year property.......................................


                                                                2 years5

        5-year property.......................................


                                                                3 years5

        7-year property.......................................


                                                                4 years5

        10-year property......................................


                                                                6 years5

        15-year property......................................


                                                                9 years5

        20-year property......................................


                                                               12 years5

        Nonresidential real property..........................


                                                               22 years.

        ``(3) Deduction allowed in computing minimum tax.--For purposes 
    of determining alternative minimum taxable income under section 55, 
    the deduction under subsection (a) for property to which paragraph 
    (1) applies shall be determined under this section without regard to 
    any adjustment under section 56.
        ``(4) Qualified indian reservation property defined.--For 
    purposes of this subsection--
            ``(A) In general.--The term `qualified Indian reservation 
        property' means property which is property described in the 
        table in paragraph (2) and which is--
                ``(i) used by the taxpayer predominantly in the active 
            conduct of a trade or business within an Indian reservation,
                ``(ii) not used or located outside the Indian 
            reservation on a regular basis,
                ``(iii) not acquired (directly or indirectly) by the 
            taxpayer from a person who is related to the taxpayer 
            (within the meaning of section 465(b)(3)(C)), and
                ``(iv) not property (or any portion thereof) placed in 
            service for purposes of conducting or housing class I, II, 
            or III gaming (as defined in section 4 of the Indian 
            Regulatory Act (25 U.S.C. 2703)).
            ``(B) Exception for alternative depreciation property.--The 
        term `qualified Indian reservation property' does not include 
        any property to which the alternative depreciation system under 
        subsection (g) applies, determined--
                ``(i) without regard to subsection (g)(7) (relating to 
            election to use alternative depreciation system), and
                ``(ii) after the application of section 280F(b) 
            (relating to listed property with limited business use).
            ``(C) Special rule for reservation infrastructure 
        investment.--
                ``(i) In general.--Subparagraph (A)(ii) shall not apply 
            to qualified infrastructure property located outside of the 
            Indian reservation if the purpose of such property is to 
            connect with qualified infrastructure property located 
            within the Indian reservation.
                ``(ii) Qualified infrastructure property.--For purposes 
            of this subparagraph, the term `qualified infrastructure 
            property' means qualified Indian reservation property 
            (determined without regard to subparagraph (A)(ii)) which--

                    ``(I) benefits the tribal infrastructure,
                    ``(II) is available to the general public, and
                    ``(III) is placed in service in connection with the 
                taxpayer's active conduct of a trade or business within 
                an Indian reservation.

            Such term includes, but is not limited to, roads, power 
            lines, water systems, railroad spurs, and communications 
            facilities.
        ``(5) Real estate rentals.--For purposes of this subsection, the 
    rental to others of real property located within an Indian 
    reservation shall be treated as the active conduct of a trade or 
    business within an Indian reservation.
        ``(6) Indian reservation defined.--For purposes of this 
    subsection, the term `Indian reservation' means a reservation, as 
    defined in--
            ``(A) section 3(d) of the Indian Financing Act of 1974 (25 
        U.S.C. 1452(d)), or
            ``(B) section 4(10) of the Indian Child Welfare Act of 1978 
        (25 U.S.C. 1903(10)).
        ``(7) Coordination with nonrevenue laws.--Any reference in this 
    subsection to a provision not contained in this title shall be 
    treated for purposes of this subsection as a reference to such 
    provision as in effect on the date of the enactment of this 
    paragraph.
        ``(8) Termination.--This subsection shall not apply to property 
    placed in service after December 31, 2003.''
    (b) Effective Date.--The amendment made by this section shall apply 
to property placed in service after December 31, 1993.

SEC. 13322. INDIAN EMPLOYMENT CREDIT.

    (a) Allowance of Indian Employment Credit.--Section 38(b) (relating 
to general business credits) is amended by striking ``plus'' at the end 
of paragraph (8), by striking the period at the end of paragraph (9) and 
inserting ``, plus'', and by adding after paragraph (9) the following 
new paragraph:
        ``(10) the Indian employment credit as determined under section 
    45A(a).''
    (b) Amount of Indian Employment Credit.--Subpart D of part IV of 
subchapter A of chapter 1 (relating to business related credits) is 
amended by adding at the end thereof the following new section:

``SEC. 45A. INDIAN EMPLOYMENT CREDIT.

    ``(a) Amount of Credit.--For purposes of section 38, the amount of 
the Indian employment credit determined under this section with respect 
to any employer for any taxable year is an amount equal to 20 percent of 
the excess (if any) of --
        ``(1) the sum of--
            ``(A) the qualified wages paid or incurred during such 
        taxable year, plus
            ``(B) qualified employee health insurance costs paid or 
        incurred during such taxable year, over
        ``(2) the sum of the qualified wages and qualified employee 
    health insurance costs (determined as if this section were in 
    effect) which were paid or incurred by the employer (or any 
    predecessor) during calendar year 1993.
    ``(b) Qualified Wages; Qualified Employee Health Insurance Costs.--
For purposes of this section--
        ``(1) Qualified wages.--
            ``(A) In general.--The term `qualified wages' means any 
        wages paid or incurred by an employer for services performed by 
        an employee while such employee is a qualified employee.
            ``(B) Coordination with targeted jobs credit.--The term 
        `qualified wages' shall not include wages attributable to 
        service rendered during the 1-year period beginning with the day 
        the individual begins work for the employer if any portion of 
        such wages is taken into account in determining the credit under 
        section 51.
        ``(2) Qualified employee health insurance costs.--
            ``(A) In general.--The term `qualified employee health 
        insurance costs' means any amount paid or incurred by an 
        employer for health insurance to the extent such amount is 
        attributable to coverage provided to any employee while such 
        employee is a qualified employee.
            ``(B) Exception for amounts paid under salary reduction 
        arrangements.--No amount paid or incurred for health insurance 
        pursuant to a salary reduction arrangement shall be taken into 
        account under subparagraph (A).
        ``(3) Limitation.--The aggregate amount of qualified wages and 
    qualified employee health insurance costs taken into account with 
    respect to any employee for any taxable year (and for the base 
    period under subsection (a)(2)) shall not exceed $20,000.
    ``(c) Qualified Employee.--For purposes of this section--
        ``(1) In general.--Except as otherwise provided in this 
    subsection, the term `qualified employee' means, with respect to any 
    period, any employee of an employer if--
            ``(A) the employee is an enrolled member of an Indian tribe 
        or the spouse of an enrolled member of an Indian tribe,
            ``(B) substantially all of the services performed during 
        such period by such employee for such employer are performed 
        within an Indian reservation, and
            ``(C) the principal place of abode of such employee while 
        performing such services is on or near the reservation in which 
        the services are performed.
        ``(2) Individuals receiving wages in excess of $30,000 not 
    eligible.--An employee shall not be treated as a qualified employee 
    for any taxable year of the employer if the total amount of the 
    wages paid or incurred by such employer to such employee during such 
    taxable year (whether or not for services within an Indian 
    reservation) exceeds the amount determined at an annual rate of 
    $30,000.
        ``(3) Inflation adjustment.--The Secretary shall adjust the 
    $30,000 amount under paragraph (2) for years beginning after 1994 at 
    the same time and in the same manner as under section 415(d).
        ``(4) Employment must be trade or business employment.--An 
    employee shall be treated as a qualified employee for any taxable 
    year of the employer only if more than 50 percent of the wages paid 
    or incurred by the employer to such employee during such taxable 
    year are for services performed in a trade or business of the 
    employer. Any determination as to whether the preceding sentence 
    applies with respect to any employee for any taxable year shall be 
    made without regard to subsection (e)(2).
        ``(5) Certain employees not eligible.--The term `qualified 
    employee' shall not include--
            ``(A) any individual described in subparagraph (A), (B), or 
        (C) of section 51(i)(1),
            ``(B) any 5-percent owner (as defined in section 
        416(i)(1)(B)), and
            ``(C) any individual if the services performed by such 
        individual for the employer involve the conduct of class I, II, 
        or III gaming as defined in section 4 of the Indian Gaming 
        Regulatory Act (25 U.S.C. 2703), or are performed in a building 
        housing such gaming activity.
        ``(6) Indian tribe defined.--The term `Indian tribe' means any 
    Indian tribe, band, nation, pueblo, or other organized group or 
    community, including any Alaska Native village, or regional or 
    village corporation, as defined in, or established pursuant to, the 
    Alaska Native Claims Settlement Act (43 U.S.C. 1601 et seq.) which 
    is recognized as eligible for the special programs and services 
    provided by the United States to Indians because of their status as 
    Indians.
        ``(7) Indian reservation defined.--The term `Indian reservation' 
    has the meaning given such term by section 168(j)(6).
    ``(d) Early Termination of Employment by Employer.--
        ``(1) In general.--If the employment of any employee is 
    terminated by the taxpayer before the day 1 year after the day on 
    which such employee began work for the employer--
            ``(A) no wages (or qualified employee health insurance 
        costs) with respect to such employee shall be taken into account 
        under subsection (a) for the taxable year in which such 
        employment is terminated, and
            ``(B) the tax under this chapter for the taxable year in 
        which such employment is terminated shall be increased by the 
        aggregate credits (if any) allowed under section 38(a) for prior 
        taxable years by reason of wages (or qualified employee health 
        insurance costs) taken into account with respect to such 
        employee.
        ``(2) Carrybacks and carryovers adjusted.--In the case of any 
    termination of employment to which paragraph (1) applies, the 
    carrybacks and carryovers under section 39 shall be properly 
    adjusted.
        ``(3) Subsection not to apply in certain cases.--
            ``(A) In general.--Paragraph (1) shall not apply to--
                ``(i) a termination of employment of an employee who 
            voluntarily leaves the employment of the taxpayer,
                ``(ii) a termination of employment of an individual who 
            before the close of the period referred to in paragraph (1) 
            becomes disabled to perform the services of such employment 
            unless such disability is removed before the close of such 
            period and the taxpayer fails to offer reemployment to such 
            individual, or
                ``(iii) a termination of employment of an individual if 
            it is determined under the applicable State unemployment 
            compensation law that the termination was due to the 
            misconduct of such individual.
            ``(B) Changes in form of business.--For purposes of 
        paragraph (1), the employment relationship between the taxpayer 
        and an employee shall not be treated as terminated--
                ``(i) by a transaction to which section 381(a) applies 
            if the employee continues to be employed by the acquiring 
            corporation, or
                ``(ii) by reason of a mere change in the form of 
            conducting the trade or business of the taxpayer if the 
            employee continues to be employed in such trade or business 
            and the taxpayer retains a substantial interest in such 
            trade or business.
        ``(4) Special rule.--Any increase in tax under paragraph (1) 
    shall not be treated as a tax imposed by this chapter for purposes 
    of--
            ``(A) determining the amount of any credit allowable under 
        this chapter, and
            ``(B) determining the amount of the tax imposed by section 
        55.
    ``(e) Other Definitions and Special Rules.--For purposes of this 
section--
        ``(1) Wages.--The term `wages' has the same meaning given to 
    such term in section 51.
        ``(2) Controlled groups.--
            ``(A) All employers treated as a single employer under 
        section (a) or (b) of section 52 shall be treated as a single 
        employer for purposes of this section.
            ``(B) The credit (if any) determined under this section with 
        respect to each such employer shall be its proportionate share 
        of the wages and qualified employee health insurance costs 
        giving rise to such credit.
        ``(3) Certain other rules made applicable.--Rules similar to the 
    rules of section 51(k) and subsections (c), (d), and (e) of section 
    52 shall apply.
        ``(4) Coordination with nonrevenue laws.--Any reference in this 
    section to a provision not contained in this title shall be treated 
    for purposes of this section as a reference to such provision as in 
    effect on the date of the enactment of this paragraph.
        ``(5) Special rule for short taxable years.--For any taxable 
    year having less than 12 months, the amount determined under 
    subsection (a)(2) shall be multiplied by a fraction, the numerator 
    of which is the number of days in the taxable year and the 
    denominator of which is 365.
    ``(f) Termination.--This section shall not apply to taxable years 
beginning after December 31, 2003.''
    (c) Denial of Deduction for Portion of Wages Equal to Indian 
Employment Credit.--
        (1) Subsection (a) of section 280C (relating to rule for 
    targeted jobs credit) is amended by striking ``51(a)'' and inserting 
    ``45A(a), 51(a), and''.
        (2) Subsection (c) of section 196 (relating to deduction for 
    certain unused business credits) is amended by striking ``and'' at 
    the end of paragraph (5), by striking the period at the end of 
    paragraph (6) and inserting ``, and'', and by adding at the end the 
    following new paragraph:
        ``(7) the Indian employment credit determined under section 
    45A(a).''
    (d) Denial of Carrybacks to Preenactment Years.--Subsection (d) of 
section 39 is amended by adding at the end thereof the following new 
paragraph:
        ``(5) No carryback of section 45 credit before enactment.--No 
    portion of the unused business credit for any taxable year which is 
    attributable to the Indian employment credit determined under 
    section 45A may be carried to a taxable year ending before the date 
    of the enactment of section 45A.''
    (e) Clerical Amendment.--The table of sections for subpart D of part 
IV of subchapter A of chapter 1 is amended by adding at the end thereof 
the following:
        ``Sec. 45A. Indian employment credit.''

    (f) Effective Date.--The amendments made by this section shall apply 
to wages paid or incurred after December 31, 1993.

                     Subchapter D--Other Provisions

                      PART I--DISCLOSURE PROVISIONS

SEC. 13401. DISCLOSURE OF RETURN INFORMATION FOR ADMINISTRATION OF 
CERTAIN VETERANS PROGRAMS.
    (a) General Rule.--Subparagraph (D) of section 6103(l)(7) (relating 
to disclosure of return information to Federal, State, and local 
agencies administering certain programs) is amended by striking 
``September 30, 1997'' in the second sentence following clause (viii) 
and inserting ``September 30, 1998''.
    (b) Effective Date.--The amendment made by subsection (a) shall take 
effect on the date of the enactment of this Act.
SEC. 13402. DISCLOSURE OF RETURN INFORMATION TO CARRY OUT INCOME 
CONTINGENT REPAYMENT OF STUDENT LOANS.
    (a) General Rule.--Subsection (l) of section 6103 (relating to 
confidentiality and disclosure of returns and return information) is 
amended by adding at the end thereof the following new paragraph:
        ``(13) Disclosure of return information to carry out income 
    contingent repayment of student loans.--
            ``(A) In general.--The Secretary may, upon written request 
        from the Secretary of Education, disclose to officers and 
        employees of the Department of Education return information with 
        respect to a taxpayer who has received an applicable student 
        loan and whose loan repayment amounts are based in whole or in 
        part on the taxpayer's income. Such return information shall be 
        limited to--
                ``(i) taxpayer identity information with respect to such 
            taxpayer,
                ``(ii) the filing status of such taxpayer, and
                ``(iii) the adjusted gross income of such taxpayer.
            ``(B) Restriction on use of disclosed information.--Return 
        information disclosed under subparagraph (A) may be used by 
        officers and employees of the Department of Education only for 
        the purposes of, and to the extent necessary in, establishing 
        the appropriate income contingent repayment amount for an 
        applicable student loan.
            ``(C) Applicable student loan.--For purposes of this 
        paragraph, the term `applicable student loan' means--
                ``(i) any loan made under the program authorized under 
            part D of title IV of the Higher Education Act of 1965, and
                ``(ii) any loan made under part B or E of title IV of 
            the Higher Education Act of 1965 which is in default and has 
            been assigned to the Department of Education.
            ``(D) Termination.--This paragraph shall not apply to any 
        request made after September 30, 1998.''
    (b) Conforming Amendments.--
        (1) So much of paragraph (4) of section 6103(m) as precedes 
    subparagraph (B) thereof is amended to read as follows:
        ``(4) Individuals who owe an overpayment of federal pell grants 
    or who have defaulted on student loans administered by the 
    department of education.--
            ``(A) In general.--Upon written request by the Secretary of 
        Education, the Secretary may disclose the mailing address of any 
        taxpayer--
                ``(i) who owes an overpayment of a grant awarded to such 
            taxpayer under subpart 1 of part A of title IV of the Higher 
            Education Act of 1965, or
                ``(ii) who has defaulted on a loan--

                    ``(I) made under part B, D, or E of title IV of the 
                Higher Education Act of 1965, or
                    ``(II) made pursuant to section 3(a)(1) of the 
                Migration and Refugee Assistance Act of 1962 to a 
                student at an institution of higher education,

        for use only by officers, employees, or agents of the Department 
        of Education for purposes of locating such taxpayer for purposes 
        of collecting such overpayment or loan .''
        (2) Subparagraph (B) of section 6103(m)(4) is amended--
            (A) in clause (i), by striking ``under part B'' and 
        inserting ``under part B or D''; and
            (B) in clause (ii), by striking ``under part E'' and 
        inserting ``under subpart 1 of part A, or part D or E,'';
        (3) Section 6103(p) is amended--
            (A) in paragraph (3)(A), by striking ``(11), or (12), (m)'' 
        and inserting ``(11), (12), or (13), (m)'';
            (B) in paragraph (4)--
                (i) in the matter preceding subparagraph (A), by 
            striking out ``(10), or (11),'' and inserting ``(10), (11), 
            or (13),'', and
                (ii) in subparagraph (F)(ii), by striking ``(11), or 
            (12),'' and inserting ``(11), (12), or (13),''.
    (c) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.
SEC. 13403. USE OF RETURN INFORMATION FOR INCOME VERIFICATION UNDER 
CERTAIN HOUSING ASSISTANCE PROGRAMS.
    (a) In General.--Subparagraph (D) of section 6103(l)(7) (relating to 
the disclosure of return information to Federal, State, and local 
agencies administering certain programs) is amended--
        (1) in clause (vii), by striking ``and'' at the end;
        (2) in clause (viii), by striking the period at the end and 
    inserting ``; and'';
        (3) by inserting after clause (viii) the following new clause:
        ``(ix) any housing assistance program administered by the 
    Department of Housing and Urban Development that involves initial 
    and periodic review of an applicant's or participant's income, 
    except that return information may be disclosed under this clause 
    only on written request by the Secretary of Housing and Urban 
    Development and only for use by officers and employees of the 
    Department of Housing and Urban Development with respect to 
    applicants for and participants in such programs.''; and
        (4) by adding at the end thereof the following: ``Clause (ix) 
    shall not apply after September 30, 1998.''
    (b) Conforming Amendment.--The heading of paragraph (7) of section 
6103(l) is amended by inserting after ``code'' the following: ``, or 
certain housing assistance programs''.
    (c) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

                       PART II--PUBLIC DEBT LIMIT

SEC. 13411. INCREASE IN PUBLIC DEBT LIMIT.

    (a) General Rule.--Subsection (b) of section 3101 of title 31, 
United States Code, is amended by striking out the dollar limitation 
contained in such subsection and inserting in lieu thereof 
``$4,900,000,000,000''.
    (b) Repeal of Temporary Increase.--Effective on and after the date 
of the enactment of this Act, section 1 of Public Law 103-12 is hereby 
repealed.

                      PART III--VACCINE PROVISIONS

SEC. 13421. EXCISE TAX ON CERTAIN VACCINES MADE PERMANENT.
    (a) Tax.--Subsection (c) of section 4131 (relating to tax on certain 
vaccines) is amended to read as follows:
    ``(c) Application of Section.--The tax imposed by this section shall 
apply--
        ``(1) after December 31, 1987, and before January 1, 1993, and
        ``(2) during periods after the date of the enactment of the 
    Revenue Reconciliation Act of 1993.''
    (b) Trust Fund.--Paragraph (1) of section 9510(c) (relating to 
expenditures from Vaccine Injury Compensation Trust Fund) is amended by 
striking ``and before October 1, 1992,''.
    (c) Floor Stocks Tax.--
        (1) Imposition of tax.--On any taxable vaccine--
            (A) which was sold by the manufacturer, producer, or 
        importer on or before the date of the enactment of this Act,
            (B) on which no tax was imposed by section 4131 of the 
        Internal Revenue Code of 1986 (or, if such tax was imposed, was 
        credited or refunded), and
            (C) which is held on such date by any person for sale or 
        use,
    there is hereby imposed a tax in the amount determined under section 
    4131(b) of such Code.
        (2) Liability for tax and method of payment.--
            (A) Liability for tax.--The person holding any taxable 
        vaccine to which the tax imposed by paragraph (1) applies shall 
        be liable for such tax.
            (B) Method of payment.--The tax imposed by paragraph (1) 
        shall be paid in such manner as the Secretary shall prescribe by 
        regulations.
            (C) Time for payment.--The tax imposed by paragraph (1) 
        shall be paid on or before the last day of the 6th month 
        beginning after the date of the enactment of this Act.
        (3) Definitions.--For purposes of this subsection, terms used in 
    this subsection which are also used in section 4131 of such Code 
    shall have the respective meanings such terms have in such section.
        (4) Other laws applicable.--All provisions of law, including 
    penalties, applicable with respect to the taxes imposed by section 
    4131 of such Code shall, insofar as applicable and not inconsistent 
    with the provisions of this subsection, apply to the floor stocks 
    taxes imposed by paragraph (1), to the same extent as if such taxes 
    were imposed by such section 4131.
SEC. 13422. CONTINUATION COVERAGE UNDER GROUP HEALTH PLANS OF COSTS OF 
PEDIATRIC VACCINES.
    (a) In General.--Paragraph (1) of section 4980B(f) is amended by 
inserting ``the coverage of the costs of pediatric vaccines (as defined 
under section 2162 of the Public Health Service Act) is not reduced 
below the coverage provided by the plan as of May 1, 1993, and only if'' 
after ``only if''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply with respect to plan years beginning after the date of the 
enactment of this Act.

                   PART IV--DISASTER RELIEF PROVISIONS

SEC. 13431. MODIFICATION OF INVOLUNTARY CONVERSION RULES FOR CERTAIN 
DISASTER-RELATED CONVERSIONS.
    (a) In General.--Section 1033 (relating to involuntary conversions) 
is amended by redesignating subsection (h) as subsection (i) and by 
inserting after subsection (g) the following new subsection:
    ``(h) Special Rules for Principal Residences Damaged by 
Presidentially Declared Disasters.--
        ``(1) In general.--If the taxpayer's principal residence or any 
    of its contents is compulsorily or involuntarily converted as a 
    result of a Presidentially declared disaster--
            ``(A) Treatment of insurance proceeds.--
                ``(i) Exclusion for unscheduled personal property.--No 
            gain shall be recognized by reason of the receipt of any 
            insurance proceeds for personal property which was part of 
            such contents and which was not scheduled property for 
            purposes of such insurance.
                ``(ii) Other proceeds treated as common fund.--In the 
            case of any insurance proceeds (not described in clause (i)) 
            for such residence or contents--

                    ``(I) such proceeds shall be treated as received for 
                the conversion of a single item of property, and
                    ``(II) any property which is similar or related in 
                service or use to the residence so converted (or 
                contents thereof) shall be treated for purposes of 
                subsection (a)(2) as property similar or related in 
                service or use to such single item of property.

            ``(B) Extension of replacement period.--Subsection (a)(2)(B) 
        shall be applied with respect to any property so converted by 
        substituting `4 years' for `2 years'.
        ``(2) Presidentially declared disaster.--For purposes of this 
    subsection, the term `Presidentially declared disaster' means any 
    disaster which, with respect to the area in which the residence is 
    located, resulted in a subsequent determination by the President 
    that such area warrants assistance by the Federal Government under 
    the Disaster Relief and Emergency Assistance Act.
        ``(3) Principal residence.--For purposes of this subsection, the 
    term `principal residence' has the same meaning as when used in 
    section 1034, except that such term shall include a residence not 
    treated as a principal residence solely because the taxpayer does 
    not own the residence.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to property compulsorily or involuntarily converted as a result of 
disasters for which the determination referred to in section 1033(h)(2) 
of the Internal Revenue Code of 1986 (as added by this section) is made 
on or after September 1, 1991, and to taxable years ending on or after 
such date.

                    Part V--Miscellaneous Provisions

SEC. 13441. INCREASE IN PRESIDENTIAL ELECTION CAMPAIGN FUND CHECK-OFF.
    (a) In General.--Section 6096(a) (relating to designation by 
individuals) is amended--
        (1) by striking ``$1'' each place it appears and inserting 
    ``$3'', and
        (2) by striking ``$2'' and inserting ``$6''.
    (b) Effective Date.--The amendments made by subsection (a) apply 
with respect to tax returns required to be filed after December 31, 
1993.
SEC. 13442. SPECIAL RULE FOR HOSPITAL SERVICES.
    (a) In General.--Section 162 (relating to trade or business 
deductions), as amended by section 13211, is amended by redesignating 
subsection (n) as subsection (o) and by inserting after subsection (m) 
the following new subsection:
    ``(n) Special rule for certain group health plans.--
        ``(1) In general.--No deduction shall be allowed under this 
    chapter to an employer for any amount paid or incurred in connection 
    with a group health plan if the plan does not reimburse for 
    inpatient hospital care services provided in the State of New York--
            ``(A) except as provided in subparagraphs (B) and (C), at 
        the same rate as licensed commercial insurers are required to 
        reimburse hospitals for such services when such reimbursement is 
        not through such a plan,
            ``(B) in the case of any reimbursement through a health 
        maintenance organization, at the same rate as health maintenance 
        organizations are required to reimburse hospitals for such 
        services for individuals not covered by such a plan (determined 
        without regard to any government-supported individuals exempt 
        from such rate), or
            ``(C) in the case of any reimbursement through any 
        corporation organized under Article 43 of the New York State 
        Insurance Law, at the same rate as any such corporation is 
        required to reimburse hospitals for such services for 
        individuals not covered by such a plan.
        ``(2) State law exception.--Paragraph (1) shall not apply to any 
    group health plan which is not required under the laws of the State 
    of New York (determined without regard to this subsection or other 
    provisions of Federal law) to reimburse at the rates provided in 
    paragraph (1).
        ``(3) Group health plan.--For purposes of this subsection, the 
    term `group health plan' means a plan of, or contributed to by, an 
    employer or employee organization (including a self-insured plan) to 
    provide health care (directly or otherwise) to any employee, any 
    former employee, the employer, or any other individual associated or 
    formerly associated with the employer in a business relationship, or 
    any member of their family.''
    (b) Effective Date.--The provisions of this section shall apply to 
services provided after February 2, 1993, and on or before May 12, 1995.
SEC. 13443. CREDIT FOR PORTION OF EMPLOYER SOCIAL SECURITY TAXES PAID 
WITH RESPECT TO EMPLOYEE CASH TIPS.
    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
(relating to business related credits) is amended by adding at the end 
the following new section:
``SEC. 45B. CREDIT FOR PORTION OF EMPLOYER SOCIAL SECURITY TAXES PAID 
WITH RESPECT TO EMPLOYEE CASH TIPS.
    ``(a) General Rule.--For purposes of section 38, the employer social 
security credit determined under this section for the taxable year is an 
amount equal to the excess employer social security tax paid or incurred 
by the taxpayer during the taxable year.
    ``(b) Excess Employer Social Security Tax.--For purposes of this 
section--
        ``(1) In general.--The term `excess employer social security 
    tax' means any tax paid by an employer under section 3111 with 
    respect to tips received by an employee during any month, to the 
    extent such tips--
            ``(A) are deemed to have been paid by the employer to the 
        employee pursuant to section 3121(q), and
            ``(B) exceed the amount by which the wages (excluding tips) 
        paid by the employer to the employee during such month are less 
        than the total amount which would be payable (with respect to 
        such employment) at the minimum wage rate applicable to such 
        individual under section 6(a)(1) of the Fair Labor Standards Act 
        of 1938 (determined without regard to section 3(m) of such Act).
        ``(2) Only tips received at food and beverage establishments 
    taken into account.--In applying paragraph (1), there shall be taken 
    into account only tips received from customers in connection with 
    the provision of food or beverages for consumption on the premises 
    of an establishment with respect to which the tipping of employees 
    serving food or beverages by customers is customary.
    ``(c) Denial of Double Benefit.--No deduction shall be allowed under 
this chapter for any amount taken into account in determining the credit 
under this section.
    ``(d) Election Not To Claim Credit.--This section shall not apply to 
a taxpayer for any taxable year if such taxpayer elects to have this 
section not apply for such taxable year.''
    (b) Credit to be Part of General Business Credit.--
        (1) In general.--Subsection (b) of section 38 (relating to 
    current year business credit) is amended by striking ``plus'' at the 
    end of paragraph (9), by striking the period at the end of paragraph 
    (10) and inserting ``, plus'', and by adding at the end the 
    following new paragraph:
        ``(11) the employer social security credit determined under 
    section 45B(a).''
        (2) Limitation on carrybacks.--Subsection (d) of section 39 
    (relating to transitional rules) is amended by adding at the end the 
    following new paragraph:
        ``(6) No carryback of section 45 credit before enactment.--No 
    portion of the unused business credit for any taxable year which is 
    attributable to the employer social security credit determined under 
    section 45B may be carried back to a taxable year ending before the 
    date of the enactment of section 45B.''
    (c) Clerical Amendment.--The table of sections for subpart D of part 
IV of subchapter A of chapter 1 is amended by adding at the end the 
following new item:
        ``Sec. 45B. Credit for portion of employer social security taxes 
                  paid with respect to employee cash tips.''

    (d) Effective Date.--The amendments made by this section shall apply 
with respect to taxes paid after December 31, 1993.
SEC. 13444. AVAILABILITY AND USE OF DEATH INFORMATION.
    (a) Restriction on Disclosure of Tax Return Information.--Subsection 
(d) of section 6103 is amended by adding at the end thereof the 
following new paragraph:
        ``(4) Availability and use of death information.--
            ``(A) In general.--No returns or return information may be 
        disclosed under paragraph (1) to any agency, body, or commission 
        of any State (or any legal representative thereof) during any 
        period during which a contract meeting the requirements of 
        subparagraph (B) is not in effect between such State and the 
        Secretary of Health and Human Services.
            ``(B) Contractual requirements.--A contract meets the 
        requirements of this subparagraph if--
                ``(i) such contract requires the State to furnish the 
            Secretary of Health and Human Services information 
            concerning individuals with respect to whom death 
            certificates (or equivalent documents maintained by the 
            State or any subdivision thereof) have been officially filed 
            with it, and
                ``(ii) such contract does not include any restriction on 
            the use of information obtained by such Secretary pursuant 
            to such contract, except that such contract may provide that 
            such information is only to be used by the Secretary (or any 
            other Federal agency) for purposes of ensuring that Federal 
            benefits or other payments are not erroneously paid to 
            deceased individuals.
        Any information obtained by the Secretary of Health and Human 
        Services under such a contract shall be exempt from disclosure 
        under section 552 of title 5, United States Code, and from the 
        requirements of section 552a of such title 5.
            ``(C) Special exception.--The provisions of subparagraph (A) 
        shall not apply to any State which on July 1, 1993, was not, 
        pursuant to a contract, furnishing the Secretary of Health and 
        Human Services information concerning individuals with respect 
        to whom death certificates (or equivalent documents maintained 
        by the State or any subdivision thereof) have been officially 
        filed with it.''
    (b) Effective Date.--
        (1) In general.--Except as provided in paragraph (2), the 
    amendment made by subsection (a) shall take effect on the date one 
    year after the date of the enactment of this Act.
        (2) Special rule.--The amendment made by subsection (a) shall 
    take effect on the date 2 years after the date of the enactment of 
    this Act in the case of any State if it is established to the 
    satisfaction of the Secretary of the Treasury that--
            (A) under the law of such State as in effect on the date of 
        the enactment of this Act, it is impossible for such State to 
        enter into an agreement meeting the requirements of section 
        6103(d)(4)(B) of the Internal Revenue Code of 1986 (as added by 
        subsection (a)), and
            (B) it is likely that such State will enter into such an 
        agreement during the extension period under this paragraph.

 CHAPTER 2--HEALTH CARE, HUMAN RESOURCES, INCOME SECURITY, AND CUSTOMS 
                          AND TRADE PROVISIONS

                         Subchapter A--Medicare

SEC. 13500. REFERENCES IN SUBCHAPTER; TABLE OF CONTENTS OF SUBCHAPTER.
    (a) Amendments to Social Security Act.--Except as otherwise 
specifically provided, whenever in this subchapter an amendment is 
expressed in terms of an amendment to or repeal of a section or other 
provision, the reference shall be considered to be made to that section 
or other provision of the Social Security Act.
    (b) References to OBRA.--In this subchapter, the terms ``OBRA-
1986'', ``OBRA-1987'', ``OBRA-1989'', and ``OBRA-1990'' refer to the 
Omnibus Budget Reconciliation Act of 1986 (Public Law 99-509), the 
Omnibus Budget Reconciliation Act of 1987 (Public Law 100-203), the 
Omnibus Budget Reconciliation Act of 1989 (Public Law 101-239), and the 
Omnibus Budget Reconciliation Act of 1990 (Public Law 101-508), 
respectively.
    (c) Table of Contents of Subchapter.--The table of contents of this 
subchapter is as follows:


                          SUBCHAPTER A--MEDICARE

Sec. 13500. References in subchapter; table of contents of subchapter.

                  Part I--Provisions Relating to Part A

Sec. 13501. Payments for PPS hospitals.
Sec. 13502. Reductions in payments for PPS-exempt hospitals.
Sec. 13503. Reductions in payments for skilled nursing facility 
services.
Sec. 13504. Reductions in payments for hospice services.
Sec. 13505. Hemophilia pass-through extension.
Sec. 13506. Graduate medical education payments in hospital-owned 
community health centers.
Sec. 13507. Extension of rural hospital demonstration.
Sec. 13508. Reduction in part A premium for certain individuals with 30 
or more quarters of Social Security coverage.

                 Part II--Provisions Relating to Part B


                      SUBPART A--PHYSICIANS' SERVICES

Sec. 13511. Reduction in default update for conversion factor for 1994 
and 1995.
Sec. 13512. Reduction in performance standard rate of increase and 
increase in maximum reduction permitted in default update.
Sec. 13513. Practice expense relative value units.
Sec. 13514. Separate payment for interpretation of electrocardiograms.
Sec. 13515. Payments for new physicians and practitioners.
Sec. 13516. Payments for anesthesia.
Sec. 13517. Extension of physician payment provisions to 
nonparticipating suppliers and other persons.
Sec. 13518. Antigens under physician fee schedule.


                  SUBPART B--OUTPATIENT HOSPITAL SERVICES

Sec. 13521. Extension of 10 percent reduction in payments for capital-
related costs of outpatient hospital services.
Sec. 13522. Extension of reduction in payments for other costs of 
outpatient hospital services.


              SUBPART C--AMBULATORY SURGICAL CENTER SERVICES

Sec. 13531. Ambulatory surgical center services.
Sec. 13532. Designation of certain hospitals as eye or eye and ear 
hospitals.
Sec. 13533. Reduction in payments for intraocular lenses.


                   SUBPART D--DURABLE MEDICAL EQUIPMENT

Sec. 13541. Payment for parenteral and enteral nutrients, supplies, and 
equipment during 1994 and 1995.
Sec. 13542. Revisions to payment rules for durable medical equipment.
Sec. 13543. Treatment of nebulizers, aspirators, and certain 
ventilators.
Sec. 13544. Payment for ostomy supplies and other supplies.
Sec. 13545. Payments for TENS devices.
Sec. 13546. Payments for orthotics, prosthetics, and prosthetic devices.


                        SUBPART E--OTHER PROVISIONS

Sec. 13551. Payments for clinical diagnostic laboratory tests.
Sec. 13552. Extension of Alzheimer's disease demonstration projects.
Sec. 13553. Oral cancer drugs.
Sec. 13554. Clarification of coverage of certified nurse-midwife 
services performed outside the maternity cycle.
Sec. 13555. Increase in annual cap on amount of medicare payment for 
outpatient physical therapy and occupational therapy services.
Sec. 13556. Rural health clinics and federally qualified health centers.
Sec. 13557. Extension of municipal health service demonstration 
projects.

             Part III--Provisions Relating to Parts A and B

Sec. 13561. Medicare as secondary payer.
Sec. 13562. Physician ownership and referral.
Sec. 13563. Direct graduate medical education.
Sec. 13564. Reduction in payments for home health services.
Sec. 13565. Immunosuppressive drug therapy.
Sec. 13566. Reduction in payments for erythropoientin.
Sec. 13567. Extension of social health maintenance organization 
demonstrations.
Sec. 13568. Timing of claims payment.
Sec. 13569. Extension of waiver for Watts Health Foundation.

              Part IV--Provision Relating to Part B Premium

Sec. 13571. Part B premium.

                 Part V--Provision Relating to Data Bank

Sec. 13581. Medicare and medicaid coverage data bank.

                  PART I--PROVISIONS RELATING TO PART A

SEC. 13501. PAYMENTS FOR PPS HOSPITALS.

    (a) Reductions in Payments.--
        (1) Reductions in inflation updates.--Section 1886(b)(3)(B)(i) 
    (42 U.S.C. 1395ww(b)(3)(B)(i)) is amended--
            (A) in subclause (IX)--
                (i) by inserting ``minus 2.5 percentage points'' after 
            ``market basket percentage increase'' the first place it 
            appears, and
                (ii) by striking ``plus 1.5 percentage points'' and 
            inserting ``minus 1.0 percentage point'';
            (B) in subclause (X)--
                (i) by inserting ``minus 2.5 percentage points'' after 
            ``market basket percentage increase'', and
                (ii) by striking ``and'' at the end;
            (C) in subclause (XI)--
                (i) by striking ``and each subsequent fiscal year'',
                (ii) by inserting ``minus 2.0 percentage points'' after 
            ``market basket percentage increase'', and
                (iii) by striking the period at the end and inserting a 
            comma; and
            (D) by adding at the end the following new subclauses:
        ``(XII) for fiscal year 1997, the market basket percentage 
    increase minus 0.5 percentage point for hospitals in all areas, and
        ``(XIII) for fiscal year 1998 and each subsequent fiscal year, 
    the market basket percentage increase for hospitals in all areas.''.
        (2) Updates for sole community hospitals and medicare-dependent, 
    small rural hospitals.--
            (A) In general.--Section 1886(b)(3)(B) (42 U.S.C. 
        1395ww(b)(3)(B)) is amended by adding at the end the following 
        new clause:
    ``(iv) For purposes of subparagraphs (C) and (D), the `applicable 
percentage increase' is--
        ``(I) for 12-month cost reporting periods beginning during 
    fiscal years 1986 through 1993, the applicable percentage increase 
    specified in clause (ii),
        ``(II) for fiscal year 1994, the market basket percentage 
    increase minus 2.3 percentage points (taking into account any 
    portion of the 12-month cost reporting period beginning during 
    fiscal year 1993 that occurred during fiscal year 1994),
        ``(III) for fiscal year 1995, the market basket percentage 
    increase minus 2.2 percentage points, and
        ``(IV) for fiscal year 1996 and each subsequent fiscal year, the 
    applicable percentage increase under clause (i).''.
            (B) Conforming amendments.--Section 1886(b)(3) (42 U.S.C. 
        1395ww(b)(3)) is amended--
                (i) in subparagraph (B)(ii), by striking ``, (C), 
            (D),'';
                (ii) in subparagraph (C)(i)(II), by striking ``or'' at 
            the end;
                (iii) in clause (ii) of subparagraph (C)--

                    (I) by striking ``period, the target'' and inserting 
                ``period beginning before fiscal year 1994, the 
                target'',
                    (II) by striking ``subparagraph (B)(ii)'' and 
                inserting ``subparagraph (B)(iv)'', and
                    (III) by striking the period at the end of such 
                clause and inserting a comma;

                (iv) in subparagraph (C), by inserting after clause (ii) 
            the following new clauses:
        ``(iii) with respect to discharges occurring in fiscal year 
    1994, the target amount for the cost reporting period beginning in 
    fiscal year 1993 increased by the applicable percentage increase 
    under subparagraph (B)(iv), or
        ``(iv) with respect to discharges occurring in fiscal year 1995 
    and each subsequent fiscal year, the target amount for the preceding 
    year increased by the applicable percentage increase under 
    subparagraph (B)(iv).'';
                (v) in clause (ii) of subparagraph (D)--

                    (I) by striking ``period, the target'' and inserting 
                ``period beginning before fiscal year 1994, the 
                target'',
                    (II) by striking ``(B)(ii)'' and inserting 
                ``(B)(iv)'', and
                    (III) by striking the period at the end of such 
                clause and inserting ``, and''; and

                (vi) in subparagraph (D), by inserting after clause (ii) 
            the following new clause:
        ``(iii) with respect to discharges occurring in fiscal year 
    1994, the target amount for the cost reporting period beginning in 
    fiscal year 1993 increased by the applicable percentage increase 
    under subparagraph (B)(iv).''.
        (3) Reduction in federal portion of capital payment rate.--
    Section 1886(g)(1)(A) (42 U.S.C. 1395ww(g)(1)(A)) is amended by 
    adding at the end the following new sentence: ``For discharges 
    occurring after September 30, 1993, the Secretary shall reduce by 
    7.4 percent the unadjusted standard Federal capital payment rate (as 
    described in 42 CFR 412.308(c), as in effect on the date of the 
    enactment of the Omnibus Budget Reconciliation Act of 1993) and 
    shall (for hospital cost reporting periods beginning on or after 
    October 1, 1993) redetermine which payment methodology is applied to 
    the hospital under such system to take into account such 
    reduction.''.
    (b) Wage Index Hold Harmless Protection.--
        (1) In general.--Section 1886(d)(8)(C) (42 U.S.C. 
    1395ww(d)(8)(C)) is amended by adding at the end the following new 
    clause:
    ``(iv) The application of subparagraph (B) or a decision of the 
Medicare Geographic Classification Review Board or of the Secretary 
under paragraph (1) may not result in a reduction in an urban area's 
wage index if--
        ``(I) the urban area has a wage index below the wage index for 
    rural areas in the State in which it is located; or
        ``(II) the urban area is located in a State that is composed of 
    a single urban area.''.
        (2) No standardized amount adjustment.--The Secretary of Health 
    and Human Services shall not revise the fiscal year 1992 or fiscal 
    year 1993 standardized amounts pursuant to subsections (d)(3)(B) and 
    (d)(8)(D) of section 1886 of the Social Security Act to account for 
    the amendment made by paragraph (1).
        (3) Effective date.--The amendment made by paragraph (1) shall 
    apply to discharges occurring on or after October 1, 1991.
    (c) Transition for Hospital Outlier Thresholds.--Section 
1886(d)(5)(A) (42 U.S.C. 1395ww(d)(5)(A)) is amended--
        (1) in clause (i), by striking ``The Secretary'' and inserting 
    ``For discharges occurring during fiscal years ending on or before 
    September 30, 1997, the Secretary'';
        (2) in clause (ii), by striking the period at the end and 
    inserting the following: ``, or, for discharges in fiscal years 
    beginning on or after October 1, 1994, exceed the applicable DRG 
    prospective payment rate plus a fixed dollar amount determined by 
    the Secretary.'';
        (3) in clause (iii), by striking ``shall approximate'' and 
    inserting ``shall (except as payments under clause (i) are required 
    to be reduced to take into account the requirements of clause (v)) 
    approximate''; and
        (4) by adding at the end the following new clauses:
    ``(v) The Secretary shall provide that--
        ``(I) the day outlier percentage for fiscal year 1995 shall be 
    75 percent of the day outlier percentage for fiscal year 1994;
        ``(II) the day outlier percentage for fiscal year 1996 shall be 
    50 percent of the day outlier percentage for fiscal year 1994; and
        ``(III) the day outlier percentage for fiscal year 1997 shall be 
    25 percent of the day outlier percentage for fiscal year 1994.
    ``(vi) For purposes of this subparagraph, the term `day outlier 
percentage' means, for a fiscal year, the percentage of the total 
additional payments made by the Secretary under this subparagraph for 
discharges in that fiscal year which are additional payments under 
clause (i).''.
    (d) Extension for Regional Referral Centers.--
        (1) Extension of classification through fiscal year 1994.--Any 
    hospital that is classified as a regional referral center under 
    section 1886(d)(5)(C) of the Social Security Act as of September 30, 
    1992, shall continue to be so classified for cost reporting periods 
    beginning during fiscal year 1993 or fiscal year 1994, unless the 
    area in which the hospital is located is redesignated as a 
    Metropolitan Statistical Area by the Office of Management and Budget 
    for such a fiscal year.
        (2) Permitting hospitals to decline reclassification.--If any 
    hospital fails to qualify as a rural referral center under section 
    1886(d)(5)(C) of the Social Security Act as a result of a decision 
    by the Medicare Geographic Classification Review Board under section 
    1886(d)(10) of such Act to reclassify the hospital as being located 
    in an urban area for fiscal year 1993 or fiscal year 1994, the 
    Secretary of Health and Human Services shall--
            (A) notify such hospital of such failure to qualify,
            (B) provide an opportunity for such hospital to decline such 
        reclassification, and
            (C) if the hospital--
                (i) declines such reclassification, administer the 
            Social Security Act (other than section 1886(d)(8)(D)) for 
            such fiscal year as if the decision by the Review Board had 
            not occurred, or
                (ii) fails to decline such reclassification, administer 
            the Social Security Act without regard to paragraph (1).
        (3) Requiring lump-sum retroactive payment for hospitals losing 
    classification.--
            (A) In general.--In the case of a hospital described in 
        paragraph (1), the Secretary of Health and Human Services shall 
        make a lump-sum payment to the hospital equal to the difference 
        between the aggregate payment made to the hospital under section 
        1886 of such Act (excluding outlier payments under subsection 
        (d)(5)(A) of such section) during the period of applicability 
        described in subparagraph (B) and the aggregate payment that 
        would have been made to the hospital under such section if, 
        during the period of applicability, the hospital was classified 
        a regional referral center under section 1886(d)(5)(C) of such 
        Act.
            (B) Period of applicability.--In subparagraph (A), the 
        ``period of applicability'' is the period that begins on October 
        1, 1992, and ends on the date of the enactment of this Act.
    (e) Extension for Medicare-Dependent, Small Rural Hospitals.--
        (1) Extension of additional payments.--Section 1886(d)(5)(G) (42 
    U.S.C. 1395ww(d)(5)(G)) is amended--
            (A) in clause (i) in the matter preceding subclause (I), by 
        striking ``ending on or before March 31, 1993,'' and all that 
        follows and inserting the following: ``before October 1, 1994, 
        in the case of a subsection (d) hospital which is a medicare-
        dependent, small rural hospital, payment under paragraph (1)(A) 
        shall be equal to the sum of the amount determined under clause 
        (ii) and the amount determined under paragraph (1)(A)(iii).'';
            (B) by redesignating clauses (ii) and (iii) as clauses (iii) 
        and (iv); and
            (C) by inserting after clause (i) the following new clause:
    ``(ii) The amount determined under this clause is--
        ``(I) for discharges occurring during the first 3 12-month cost 
    reporting periods that begin on or after April 1, 1990, the amount 
    by which the hospital's target amount for the cost reporting period 
    (as defined in subsection (b)(3)(D)) exceeds the amount determined 
    under paragraph (1)(A)(iii); and
        ``(II) for discharges occurring during any subsequent cost 
    reporting period (or portion thereof) and before October 1, 1994, 50 
    percent of the amount by which the hospital's target amount for the 
    cost reporting period (as defined in subsection (b)(3)(D)) exceeds 
    the amount determined under paragraph (1)(A)(iii).''.
         (2) Permitting hospitals to decline reclassification.--If any 
    hospital fails to qualify as a medicare-dependent, small rural 
    hospital under section 1886(d)(5)(G)(i) of the Social Security Act 
    as a result of a decision by the Medicare Geographic Classification 
    Review Board under section 1886(d)(10) of such Act to reclassify the 
    hospital as being located in an urban area for fiscal year 1993 or 
    fiscal year 1994, the Secretary of Health and Human Services shall--
            (A) notify such hospital of such failure to qualify,
            (B) provide an opportunity for such hospital to decline such 
        reclassification, and
            (C) if the hospital declines such reclassification, 
        administer the Social Security Act (other than section 
        1886(d)(8)(D)) for such fiscal year as if the decision by the 
        Review Board had not occurred.
        (3) Requiring lump-sum retroactive payment.--
            (A) In general.--In the case of a hospital treated as a 
        medicare-dependent, small rural hospital under section 
        1886(d)(5)(G) of the Social Security Act, the Secretary of 
        Health and Human Services shall make a lump-sum payment to the 
        hospital equal to the difference between the aggregate payment 
        made to the hospital under section 1886 of such Act (excluding 
        outlier payments under subsection (d)(5)(A) of such section) 
        during the period of applicability described in subparagraph (B) 
        and the aggregate payment that would have been made to the 
        hospital under such section if, during the period of 
        applicability, section 1886(d)(5)(G) of such Act had been 
        applied as if the amendments made by paragraph (1) had been in 
        effect.
            (B) Period of applicability.--In subparagraph (A), the 
        ``period of applicability'' is, with respect to a hospital, the 
        period that begins on the first day of the hospital's first 12-
        month cost reporting period that begins after April 1, 1992, and 
        ends on the date of the enactment of this Act.
    (f) Extension of Regional Floor.--Section 1886(d)(1)(A)(iii) (42 
U.S.C. 1395ww(d)(1)(A)(iii)) is amended to read as follows:
        ``(iii) beginning on or after April 1, 1988, is equal to--
            ``(I) the national adjusted DRG prospective payment rate 
        determined under paragraph (3) for such discharges, or
            ``(II) for discharges occurring during a fiscal year ending 
        on or before September 30, 1996, the sum of 85 percent of the 
        national adjusted DRG prospective payment rate determined under 
        paragraph (3) for such discharges and 15 percent of the regional 
        adjusted DRG prospective payment rate determined under such 
        paragraph, but only if the average standardized amount 
        (described in clause (i)(I) or clause (ii)(I) of paragraph 
        (3)(D)) for hospitals within the region of, and in the same 
        large urban or other area (or, for discharges occurring during a 
        fiscal year ending on or before September 30, 1994, the same 
        rural, large urban, or other urban area) as, the hospital is 
        greater than the average standardized amount (described in the 
        respective clause) for hospitals within the United States in 
        that type of area for discharges occurring during such fiscal 
        year.''.
SEC. 13502. REDUCTIONS IN PAYMENTS FOR PPS-EXEMPT HOSPITALS.
    (a) In General.--Section 1886(b)(3)(B) (42 U.S.C. 1395ww(b)(3)(B)), 
as amended by section 13501(a)(2)(B)(i), is amended--
        (1) in clause (ii)--
            (A) by striking ``and'' at the end of subclause (III);
            (B) in subclause (IV)--
                (i) by striking ``subsequent fiscal years'' and 
            inserting ``a subsequent fiscal year ending on or before 
            September 30, 1993,'', and
                (ii) by striking the period at the end and inserting a 
            comma; and
            (C) by adding at the end the following new subclauses:
        ``(V) fiscal years 1994 through 1997, is the market basket 
    percentage increase minus the applicable reduction (as defined in 
    clause (v)(II)), or in the case of a hospital for a fiscal year for 
    which the hospital's update adjustment percentage (as defined in 
    clause (v)(I)) is at least 10 percent, the market basket percentage 
    increase, and
        ``(VI) subsequent fiscal years is the market basket percentage 
    increase.''; and
        (2) by adding at the end the following new clause:
    ``(v) For purposes of clause (ii)(V)--
        ``(I) a hospital's `update adjustment percentage' for a fiscal 
    year is the percentage by which the hospital's allowable operating 
    costs of inpatient hospital services recognized under this title for 
    the cost reporting period beginning in fiscal year 1990 exceeds the 
    hospital's target amount (as determined under subparagraph (A)) for 
    such cost reporting period, increased for each fiscal year 
    (beginning with fiscal year 1994) by the sum of any of the 
    hospital's applicable reductions under subclause (V) for previous 
    fiscal years; and
        ``(II) the `applicable reduction' with respect to a hospital for 
    a fiscal year is the lesser of 1 percentage point or the percentage 
    point difference between 10 percent and the hospital's update 
    adjustment percentage for the fiscal year.''.
    (b) Effect of Payment Reduction on Exceptions and Adjustments.--
Section 1886(b)(4)(A) (42 U.S.C. 1395ww(b)(4)(A)) is amended--
        (1) by inserting ``(i)'' after ``(A)'', and
        (2) by adding at the end the following:
    ``(ii) The payment reductions under paragraph (3)(B)(ii)(V) shall 
not be considered by the Secretary in making adjustments pursuant to 
clause (i).''.
SEC. 13503. REDUCTIONS IN PAYMENTS FOR SKILLED NURSING FACILITY 
SERVICES.
    (a) Payments Based on Cost Limits.--
        (1) No changes in cost limits.--The Secretary of Health and 
    Human Services may not provide for any change in the limits on per 
    diem routine service costs for extended care services under section 
    1888 of the Social Security Act for cost reporting periods beginning 
    during fiscal years 1994 and 1995, except as may be necessary to 
    take into account the amendments made by paragraph (3)(A). The 
    effect of the preceding sentence shall not be considered by the 
    Secretary in making adjustments pursuant to section 1888(c) of such 
    Act to the payment limits for such services during such fiscal 
    years.
        (2) Delay in updates.--The last sentence of section 1888(a) (42 
    U.S.C. 1395yy(a)) is amended by inserting after ``October 1, 1992'' 
    the following: ``, on or after October 1, 1995,''.
        (3) Repeal of excess overhead allocations for hospital-based 
    facilities.--
            (A) In general.--Section 1888(b) (42 U.S.C. 1395yy(b)) is 
        amended--
                (i) by striking ``shall recognize'' and inserting ``may 
            not recognize''; and
                (ii) by striking ``(as determined by'' and all that 
            follows and inserting a period.
            (B) Effective date.--The amendments made by subparagraph (A) 
        shall apply to cost reporting periods beginning on or after 
        October 1, 1993.
    (b) Payments Determined on Prospective Basis.--The Secretary of 
Health and Human Services may not change the amount of any prospective 
payment paid to a skilled nursing facility under section 1888(d) of the 
Social Security Act for services furnished during cost reporting periods 
beginning during fiscal years 1994 and 1995, except as may be necessary 
to take into account the amendment made by subsection (c)(1)(A).
    (c) Elimination of Return on Equity for Proprietary Skilled Nursing 
Facilities.--
        (1) Repeal of requirement for return on equity.--(A) Section 
    1861(v)(1)(B) (42 U.S.C. 1395x(v)(1)(B)) is amended to read as 
    follows:
    ``(B) In the case of extended care services, the regulations under 
subparagraph (A) shall not include provision for specific recognition of 
a return on equity capital.''.
        (B) Section 1878(f)(2) (42 U.S.C. 1395oo(f)(2)) is amended by 
    striking ``the rate of return on equity capital established by 
    regulation pursuant to section 1861(v)(1)(B) and in effect at the 
    time'' and inserting ``the rate of interest on obligations issued 
    for purchase by the Federal Hospital Insurance Trust Fund for the 
    month in which''.
        (2) Effective date.--The amendments made by paragraph (1) shall 
    take effect October 1, 1993.
SEC. 13504. REDUCTIONS IN PAYMENTS FOR HOSPICE SERVICES.
    Section 1814(i)(1)(C) (42 U.S.C. 1395f(i)(1)(C)) is amended by 
striking ``increased by'' and all that follows and inserting the 
following: ``increased by--
        ``(I) for a fiscal year ending on or before September 30, 1993, 
    the market basket percentage increase (as defined in section 
    1886(b)(3)(B)(iii)) for the fiscal year;
        ``(II) for fiscal year 1994, the market basket percentage 
    increase for the fiscal year minus 2.0 percentage points;
        ``(III) for fiscal year 1995, the market basket percentage 
    increase for the fiscal year minus 1.5 percentage points;
        ``(IV) for fiscal year 1996, the market basket percentage 
    increase for the fiscal year minus 1.5 percentage points;
        ``(V) for fiscal year 1997, the market basket percentage 
    increase for the fiscal year minus 0.5 percentage point; and
        ``(VI) for a subsequent fiscal year, the market basket 
    percentage increase for the fiscal year.''.

SEC. 13505. HEMOPHILIA PASS-THROUGH EXTENSION.

    Effective as if included in the enactment of OBRA-1989, section 
6011(d) of such Act is amended by striking ``2 years after the date of 
enactment of this Act'' and inserting ``September 30, 1994''.
SEC. 13506. GRADUATE MEDICAL EDUCATION PAYMENTS IN HOSPITAL-OWNED 
COMMUNITY HEALTH CENTERS.
    Section 1886(d)(5)(B)(iv) (42 U.S.C. 1395ww(d)(5)(B)(iv)) is amended 
by inserting after ``the hospital'' the following: ``or providing 
services at any entity receiving a grant under section 330 of the Public 
Health Service Act that is under the ownership or control of the 
hospital (if the hospital incurs all, or substantially all, of the costs 
of the services furnished by such interns and residents)''.
SEC. 13507. EXTENSION OF RURAL HOSPITAL DEMONSTRATION.
    Section 4008(i)(1) of OBRA-1990 is amended by adding at the end the 
following new sentence: ``The Secretary shall continue any such 
demonstration project until at least July 1, 1997.''.
SEC. 13508. REDUCTION IN PART A PREMIUM FOR CERTAIN INDIVIDUALS WITH 30 
OR MORE QUARTERS OF SOCIAL SECURITY COVERAGE.
    (a) In General.--Section 1818(d) (42 U.S.C. 1395i-2(d)) is amended--
        (1) in the second sentence of paragraph (2), by striking ``Such 
    amount'' and inserting ``Subject to paragraph (4), the amount of an 
    individual's monthly premium under this section''; and
        (2) by adding at the end the following new paragraph:
    ``(4)(A) In the case of an individual described in subparagraph (B), 
the monthly premium for a month shall be reduced by the applicable 
reduction percent specified in the following table:

  
                                                          The applicable
  
                                                               reduction
``For a month in:
                                                             percent is:
  1994..................................................
                                                             25 percent5
  1995..................................................
                                                             30 percent5
  1996..................................................
                                                             35 percent5
  1997..................................................
                                                             40 percent5
  1998 or subsequent year...............................
                                                             45 percent.

    ``(B) An individual described in this subparagraph with respect to a 
month is an individual who establishes to the satisfaction of the 
Secretary that, as of the last day of the previous month, the 
individual--
        ``(i) had at least 30 quarters of coverage under title II;
        ``(ii) was married (and had been married for the previous 1-year 
    period) to an individual who had at least 30 quarters of coverage 
    under such title;
        ``(iii) had been married to an individual for a period of at 
    least 1 year (at the time of such individual's death) if at such 
    time the individual had at least 30 quarters of coverage under such 
    title; or
        ``(iv) is divorced from an individual and had been married to 
    the individual for a period of at least 10 years (at the time of the 
    divorce) if at such time the individual had at least 30 quarters of 
    coverage under such title.''.
    (b) Effective Date.--The amendments made by this section shall apply 
to monthly premiums under section 1818 of the Social Security Act for 
months beginning with January 1, 1994.

                 PART II--PROVISIONS RELATING TO PART B

                     Subpart A--Physicians' Services

SEC. 13511. REDUCTION IN DEFAULT UPDATE FOR CONVERSION FACTOR FOR 1994 
AND 1995.
    (a) In General.--Section 1848 (42 U.S.C. 1395w-4) is amended--
        (1) in subsection (d)(3)(A)--
            (A) in clause (i), by striking ``clause (iii)'' and 
        inserting ``clauses (iii) through (v)'', and
            (B) by adding at the end the following new clauses:
                ``(iv) Adjustment in percentage increase for 1994.--In 
            applying clause (i) for services furnished in 1994, the 
            percentage increase in the appropriate update index shall be 
            reduced by--

                    ``(I) 3.6 percentage points for services included in 
                the category of surgical services (as defined for 
                purposes of subsection (j)(1)), and
                    ``(II) 2.6 percentage points for other services.

                ``(v) Adjustment in percentage increase for 1995.--In 
            applying clause (i) for services furnished in 1995, the 
            percentage increase in the appropriate update index shall be 
            reduced by 2.7 percentage points.
                ``(vi) Exception for category of primary care 
            services.--Clauses (iv) and (v) shall not apply to services 
            included in the category of primary care services (as 
            defined for purposes of subsection (j)(1)).''; and
        (2) in subsection (j)(1), by striking ``Secretary)'' and 
    inserting ``Secretary and including anesthesia services), primary 
    care services (as defined in section 1842(i)(4)),''.
    (b) Effective Dates.--The amendments made by this section shall 
apply to services furnished on or after January 1, 1994; except that 
amendment made by subsection (a)(2) shall not apply--
        (1) to volume performance standard rates of increase established 
    under section 1848(f) of the Social Security Act for fiscal years 
    before fiscal year 1994, and
        (2) to adjustment in updates in the conversion factors for 
    physicians' services under section 1848(d)(3)(B) of such Act for 
    physicians' services to be furnished in calendar years before 1996.
SEC. 13512. REDUCTION IN PERFORMANCE STANDARD RATE OF INCREASE AND 
INCREASE IN MAXIMUM REDUCTION PERMITTED IN DEFAULT UPDATE.
    (a) Reduction in Performance Standard Factor.--Section 1848(f)(2)(B) 
(42 U.S.C. 1395w-4(f)(2)(B)) is amended--
        (1) by striking ``and'' at the end of clause (ii), and
        (2) by striking clause (iii) and inserting the following:
                ``(iii) for 1993 is 2 percentage points,
                ``(iv) for 1994 is 3\1/2\ percentage points, and
                ``(v) for each succeeding year is 4 percentage 
            points.''.
    (b) Increase in Maximum Reduction Permitted in Default Update.--
Section 1848(d)(3)(B)(ii) (42 U.S.C. 1395w-4(d)(3)(B)(ii)) is amended--
        (1) in subclause (II), by striking ``or 1995'', and
        (2) in subclause (III), by striking ``3'' and inserting ``5''.

SEC. 13513. PRACTICE EXPENSE RELATIVE VALUE UNITS.

    Section 1848(c)(2) (42 U.S.C. 1395w-4(c)(2)) is amended by adding at 
the end the following new subparagraph:
            ``(E) Reduction in practice expense relative value units for 
        certain services.--
                ``(i) In general.--Subject to clause (ii), the Secretary 
            shall reduce the practice expense relative value units 
            applied to services described in clause (iii) furnished in--

                    ``(I) 1994, by 25 percent of the number by which the 
                number of practice expense relative value units 
                (determined for 1994 without regard to this 
                subparagraph) exceeds the number of work relative value 
                units determined for 1994,
                    ``(II) 1995, by an additional 25 percent of such 
                excess, and
                    ``(III) 1996, by an additional 25 percent of such 
                excess.

                ``(ii) Floor on reductions.--The practice expense 
            relative value units for a physician's service shall not be 
            reduced under this subparagraph to a number less than 128 
            percent of the number of work relative value units.
                ``(iii) Services covered.--For purposes of clause (i), 
            the services described in this clause are physicians' 
            services that are not described in clause (iv) and for 
            which--

                    ``(I) there are work relative value units, and
                    ``(II) the number of practice expense relative value 
                units (determined for 1994) exceeds 128 percent of the 
                number of work relative value units (determined for such 
                year).

                ``(iv) Excluded services.--For purposes of clause (iii), 
            the services described in this clause are services which the 
            Secretary determines at least 75 percent of which are 
            provided under this title in an office setting.''.
SEC. 13514. SEPARATE PAYMENT FOR INTERPRETATION OF ELECTROCARDIOGRAMS.
    (a) In General.--Paragraph (3) of section 1848(b) (42 U.S.C. 1395w-
4(b)) is amended to read as follows:
        ``(3) Treatment of interpretation of electrocardiograms.--The 
    Secretary--
            ``(A) shall make separate payment under this section for the 
        interpretation of electrocardiograms performed or ordered to be 
        performed as part of or in conjunction with a visit to or a 
        consultation with a physician, and
            ``(B) shall adjust the relative values established for 
        visits and consultations under subsection (c) so as not to 
        include relative value units for interpretations of 
        electrocardiograms in the relative value for visits and 
        consultations.''.
    (b) Assuring Budget Neutrality.--Section 1848(c)(2) (42 U.S.C. 
1395w-4(c)(2)), as amended by section 13513, is further amended by 
adding at the end the following new subparagraph:
            ``(F) Budget neutrality adjustments.--The Secretary--
                ``(i) shall reduce the relative values for all services 
            (other than anesthesia services) established under this 
            paragraph (and, in the case of anesthesia services, the 
            conversion factor established by the Secretary for such 
            services) by such percentage as the Secretary determines to 
            be necessary so that, beginning in 1996, the amendment made 
            by section 13514(a) of the Omnibus Budget Reconciliation Act 
            of 1993 would not result in expenditures under this section 
            that exceed the amount of such expenditures that would have 
            been made if such amendment had not been made, and
                ``(ii) shall reduce the amounts determined under 
            subsection (a)(2)(B)(ii)(I) by such percentage as the 
            Secretary determines to be required to assure that, taking 
            into account the reductions made under clause (i), the 
            amendment made by section 13514(a) of the Omnibus Budget 
            Reconciliation Act of 1993 would not result in expenditures 
            under this section in 1994 that exceed the amount of such 
            expenditures that would have been made if such amendment had 
            not been made.''.
    (c) Conforming Amendments.--Section 1848 (42 U.S.C. 1395w-4) is 
amended--
        (1) in subsection (a)(2)(B)(ii)(I), by inserting ``and as 
    adjusted under subsection (c)(2)(F)(ii)'' after ``for 1994'';
        (2) in subsection (c)(2)(A)(i), by adding at the end the 
    following: ``Such relative values are subject to adjustment under 
    subparagraph (F)(i).''; and
        (3) in subsection (i)(1)(B), by adding at the end ``including 
    adjustments under subsection (c)(2)(F),''.
    (d) Effective Date.--The amendments made by this section shall apply 
to services furnished on or after January 1, 1994.
SEC. 13515. PAYMENTS FOR NEW PHYSICIANS AND PRACTITIONERS.
    (a) Equal Treatment of New Physicians and Practitioners.--(1) 
Section 1848(a) (42 U.S.C. 1395w-4(a)) is amended by striking paragraph 
(4).
    (2) Section 1842(b)(4) (42 U.S.C. 1395u(b)(4)) is amended by 
striking subparagraph (F).
    (b) Budget Neutrality Adjustment.--Notwithstanding any other 
provision of law, the Secretary of Health and Human Services shall 
reduce the following values and amounts for 1994 (to be applied for that 
year and subsequent years) by such uniform percentage as the Secretary 
determines to be required to assure that the amendments made by 
subsection (a) will not result in expenditures under part B of title 
XVIII of the Social Security Act in 1994 that exceed the amount of such 
expenditures that would have been made if such amendments had not been 
made:
        (1) The relative values established under section 1848(c) of 
    such Act for services (other than anesthesia services) and, in the 
    case of anesthesia services, the conversion factor established under 
    section 1848 of such Act for such services.
        (2) The amounts determined under section 1848(a)(2)(B)(ii)(I) of 
    such Act.
        (3) The prevailing charges or fee schedule amounts to be applied 
    under such part for services of a health care practitioner (as 
    defined in section 1842(b)(4)(F)(ii)(I) of such Act, as in effect 
    before the date of the enactment of this Act).
    (c) Conforming Amendments.--Section 1848 (42 U.S.C. 1395w-4), as 
amended by section 13514(c), is amended--
        (1) in subsection (a)(2)(B)(ii)(I), by inserting ``and under 
    section 13515(b) of the Omnibus Budget Reconciliation Act of 1993'' 
    after ``subsection (c)(2)(F)(ii)'';
        (2) in subsection (c)(2)(A)(i), by inserting ``and section 
    13515(b) of the Omnibus Budget Reconciliation Act of 1993'' after 
    ``under subparagraph (F)(i)''; and
        (3) in subsection (i)(1)(B), by inserting ``and section 13515(b) 
    of the Omnibus Budget Reconciliation Act of 1993'' after ``under 
    subsection (c)(2)(F)''.
    (d) Effective Date.--The amendments made by subsection (a) shall 
apply to services furnished on or after January 1, 1994.

SEC. 13516. PAYMENTS FOR ANESTHESIA.

    (a) Payment to a Physician for Medical Direction.--
        (1) In general.--Section 1848(a) (42 U.S.C. 1395w-4(a)), as 
    amended by section 13515(a)(1), is amended by adding at the end the 
    following new paragraph:
        ``(4) Special rule for medical direction.--
            ``(A) In general.--With respect to physicians' services 
        furnished on or after January 1, 1994, and consisting of medical 
        direction of two, three, or four concurrent anesthesia cases, 
        the fee schedule amount to be applied shall be equal to one-half 
        of the amount described in subparagraph (B).
            ``(B) Amount.--The amount described in this subparagraph, 
        for a physician's medical direction of the performance of 
        anesthesia services, is the following percentage of the fee 
        schedule amount otherwise applicable under this section if the 
        anesthesia services were personally performed by the physician 
        alone:
                ``(i) For services furnished during 1994, 120 percent.
                ``(ii) For services furnished during 1995, 115 percent.
                ``(iii) For services furnished during 1996, 110 percent.
                ``(iv) For services furnished during 1997, 105 percent.
                ``(v) For services furnished after 1997, 100 percent.''.
        (2) Elimination of reduction for medical direction of multiple 
    nurse anesthetists and establishment of consistent base and time 
    units.--Paragraph (13) of section 1842(b) (42 U.S.C. 1395u(b)) is 
    amended--
            (A) by striking subparagraphs (A) and (B) and inserting the 
        following:
    ``(13)(A) In determining payments under section 1833(l) and section 
1848 for anesthesia services furnished on or after January 1, 1994, the 
methodology for determining the base and time units used shall be the 
same for services furnished by physicians, for medical direction by 
physicians of two, three, or four certified registered nurse 
anesthetists, or for services furnished by a certified registered nurse 
anesthetist (whether or not medically directed) and shall be based on 
the methodology in effect, for anesthesia services furnished by 
physicians, as of the date of the enactment of the Omnibus Budget 
Reconciliation Act of 1993.'';
            (B) by redesignating subparagraph (C) as subparagraph (B); 
        and
            (C) by striking ``subparagraph (A) or (B)'' in subparagraph 
        (B) (as so redesignated) and inserting ``subparagraph (A)''.
    (b) Payment to a Certified Registered Nurse Anesthetist for 
Medically Directed Services.--Section 1833(l)(4)(B) (42 U.S.C. 
1395l(l)(4)(B)) is amended--
        (1) in clause (i), by inserting ``and before January 1, 1994,'' 
    after ``1991,'';
        (2) in clause (ii)--
            (A) by adding ``and'' at the end of subclause (II),
            (B) by striking the comma at the end of subclause (III) and 
        inserting a period, and
            (C) by striking subclauses (IV) through (VII); and
        (3) by adding at the end the following new clause:
    ``(iii) In the case of services of a certified registered nurse 
anesthetist who is medically directed or medically supervised by a 
physician which are furnished on or after January 1, 1994, the fee 
schedule amount shall be one-half of the amount described in section 
1848(a)(5)(B) with respect to the physician.''.
SEC. 13517. EXTENSION OF PHYSICIAN PAYMENT PROVISIONS TO 
NONPARTICIPATING SUPPLIERS AND OTHER PERSONS.
    (a) In General.--Section 1848 (42 U.S.C. 1395w-4) is amended--
        (1) in subsection (a)(3)--
            (A) in the heading, by inserting ``and suppliers'' after 
        ``physicians'',
            (B) by inserting ``or a nonparticipating supplier or other 
        person'' after ``nonparticipating physician'', and
            (C) by adding at the end the following: ``In the case of 
        physicians' services (including services which the Secretary 
        excludes pursuant to subsection (j)(3)) of a nonparticipating 
        physician, supplier, or other person for which payment is made 
        under this part on a basis other than the fee schedule amount, 
        the payment shall be based on 95 percent of the payment basis 
        for such services furnished by a participating physician, 
        supplier, or other person.'';
        (2) in subsection (g)(1)--
            (A) by inserting ``or nonparticipating supplier or other 
        person (as defined in section 1842(i)(2))'' after 
        ``nonparticipating physician'',
            (B) by inserting ``including services which the Secretary 
        excludes pursuant to subsection (j)(3),'' after ``physician's 
        services ('',
            (C) by inserting ``, supplier, or other person'' after 
        ``such physician'', and
            (D) by adding at the end the following: ``In applying this 
        subparagraph, any reference in such section to a physician is 
        deemed also to include a reference to a supplier or other person 
        under this subparagraph.'';
        (3) in subsection (g)(2)(C), by inserting ``or for 
    nonparticipating suppliers or other persons'' after 
    ``nonparticipating physicians'';
        (4) in subsection (g)(2)(D), by inserting ``(or, if payment 
    under this part is made on a basis other than the fee schedule under 
    this section, 95 percent of the other payment basis)'' after 
    ``subsection (a)'';
        (5) in subsection (h)--
            (A) by inserting ``or nonparticipating supplier or other 
        person furnishing physicians' services (as defined in section 
        1848(j)(3))'' after ``physician'' the first place it appears,
            (B) by inserting ``, supplier, or other person'' after 
        ``physician'' the second place it appears, and
            (C) by inserting ``, suppliers, and other persons'' after 
        ``physicians'' the second place it appears; and
        (6) in subsection (j)(3), by inserting ``, except for purposes 
    of subsections (a)(3), (g), and (h)'' after ``tests and''.
    (b) Conforming Definition.--Section 1842(i)(2) (42 U.S.C. 
1395u(i)(2)) is amended--
        (1) by striking ``, and the term'' and inserting ``; the term'', 
    and
        (2) by inserting before the period at the end the following: ``; 
    and the term `nonparticipating supplier or other person' means a 
    supplier or other person (excluding a provider of services) that is 
    not a participating physician or supplier (as defined in subsection 
    (h)(1))''.
    (c) Effective Date.--The amendments made by subsection (a) shall 
apply to services furnished on or after January 1, 1994.

SEC. 13518. ANTIGENS UNDER PHYSICIAN FEE SCHEDULE.

    (a) In General.--Section 1848(j)(3) (42 U.S.C. 1395w-4(j)(3)) is 
amended by inserting ``(2)(G),'' after ``(2)(D),''.
    (b) Budget Neutrality Adjustment in 1995.--Notwithstanding any other 
provision of law, the Secretary of Health and Human Services shall 
implement the amendment made by subsection (a) in a manner to assure 
that such amendment will result in expenditures under part B of title 
XVIII of the Social Security Act in 1995 for services described in such 
amendment that shall be equal to the amount of expenditures for such 
services that would have been made if such amendment had not been made.
    (c) Effective Date.--The amendment made by subsection (a) shall 
apply to services furnished on or after January 1, 1995.

                 Subpart B--Outpatient Hospital Services

SEC. 13521. EXTENSION OF 10 PERCENT REDUCTION IN PAYMENTS FOR CAPITAL-
RELATED COSTS OF OUTPATIENT HOSPITAL SERVICES.
    Section 1861(v)(1)(S)(ii)(I) (42 U.S.C. 1395x(v)(1)(S)(ii)(I)) is 
amended by striking ``fiscal year 1992, 1993, 1994, or 1995'' and 
inserting ``fiscal years 1992 through 1998''.
SEC. 13522. EXTENSION OF REDUCTION IN PAYMENTS FOR OTHER COSTS OF 
OUTPATIENT HOSPITAL SERVICES.
    Section 1861(v)(1)(S)(ii)(II) (42 U.S.C. 1395x(v)(1)(S)(ii)(II)) is 
amended by striking ``, 1992, 1993, 1994, or 1995'' and inserting 
``through 1998''.

             Subpart C--Ambulatory Surgical Center Services

SEC. 13531. AMBULATORY SURGICAL CENTER SERVICES.

    The Secretary of Health and Human Services shall not provide for any 
inflation update in the payment amounts under subparagraphs (A) and (B) 
of section 1833(i)(2) of the Social Security Act for fiscal year 1994 or 
for fiscal year 1995.
SEC. 13532. DESIGNATION OF CERTAIN HOSPITALS AS EYE OR EYE AND EAR 
HOSPITALS.
    (a) In General.--Section 1833(i) (42 U.S.C. 1395l(i)) is amended--
        (1) in paragraph (3)(B)(ii)--
            (A) in the matter preceding subclause (I), by striking ``the 
        last sentence of this clause'' and inserting ``paragraph (4)'', 
        and
            (B) by striking the last sentence; and
        (2) by inserting after paragraph (3) the following new 
    paragraph:
    ``(4)(A) In the case of a hospital that--
        ``(i) makes application to the Secretary and demonstrates that 
    it specializes in eye services or eye and ear services (as 
    determined by the Secretary),
        ``(ii) receives more than 30 percent of its total revenues from 
    outpatient services, and
        ``(iii) on October 1, 1987--
            ``(I) was an eye specialty hospital or an eye and ear 
        specialty hospital, or
            ``(II) was operated as an eye or eye and ear unit (as 
        defined in subparagraph (B)) of a general acute care hospital 
        which, on the date of the application described in clause (i), 
        operates less than 20 percent of the beds that the hospital 
        operated on October 1, 1987, and has sold or otherwise disposed 
        of a substantial portion of the hospital's other acute care 
        operations,
the cost proportion and ASC proportion in effect under subclauses (I) 
and (II) of paragraph (3)(B)(ii) for cost reporting periods beginning in 
fiscal year 1988 shall remain in effect for cost reporting periods 
beginning on or after October 1, 1988, and before January 1, 1995.
    ``(B) For purposes of this subparagraph (A)(iii)(II), the term `eye 
or eye and ear unit' means a physically separate or distinct unit 
containing separate surgical suites devoted solely to eye or eye and ear 
services.''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to portions of cost reporting periods beginning on or after 
January 1, 1994.
SEC. 13533. REDUCTION IN PAYMENTS FOR INTRAOCULAR LENSES.
    Notwithstanding section 1833(i)(2)(A)(iii) of the Social Security 
Act, the amount of payment determined under such section for an 
intraocular lens inserted subsequent to or during cataract surgery in an 
ambulatory surgical center on or after January 1, 1994, and before 
January 1, 1999, shall be equal to $150.

                  Subpart D--Durable Medical Equipment

SEC. 13541. PAYMENT FOR PARENTERAL AND ENTERAL NUTRIENTS, SUPPLIES, AND 
EQUIPMENT DURING 1994 AND 1995.
    In determining the amount of payment under part B of title XVIII of 
the Social Security Act with respect to parenteral and enteral 
nutrients, supplies, and equipment during 1994 and 1995, the charges 
determined to be reasonable with respect to such nutrients, supplies, 
and equipment may not exceed the charges determined to be reasonable 
with respect to such nutrients, supplies, and equipment during 1993.
SEC. 13542. REVISIONS TO PAYMENT RULES FOR DURABLE MEDICAL EQUIPMENT.
    (a) Basing National Payment Limits on Median of Local Payment 
Amounts.--
        (1) Inexpensive and routinely purchased items; items requiring 
    frequent and substantial servicing.--(A) Paragraphs (2)(C)(i)(II) 
    and (3)(C)(i)(II) of section 1834(a) (42 U.S.C. 1395m(a)) are each 
    amended--
            (i) by striking ``1992'' the first place it appears and 
        inserting ``1992, 1993, and 1994''; and
            (ii) by striking ``1992'' the second place it appears and 
        inserting ``the year''.
        (B) Paragraphs (2)(C)(ii) and (3)(C)(ii) of section 1834(a) (42 
    U.S.C. 1395m(a)) are each amended--
            (i) by striking ``and'' at the end of subclause (I);
            (ii) by redesignating subclause (II) as subclause (IV); and
            (iii) by inserting after subclause (I) the following new 
        subclauses:

                    ``(II) for 1992 and 1993, the amount determined 
                under this clause for the preceding year increased by 
                the covered item update for such subsequent year,
                    ``(III) for 1994, the local payment amount 
                determined under clause (i) for such item or device for 
                that year, except that the national limited payment 
                amount may not exceed 100 percent of the median of all 
                local payment amounts determined under such clause for 
                such item for that year and may not be less than 85 
                percent of the median of all local payment amounts 
                determined under such clause for such item or device for 
                that year, and''.

        (2) Miscellaneous devices and items.--Section 1834(a)(8) (42 
    U.S.C. 1395m(a)(8)) is amended--
            (A) in subparagraph (A)(ii)(III), by striking ``1992'' and 
        inserting ``1992, 1993, and 1994''; and
            (B) in subparagraph (B)--
                (i) by striking ``and'' at the end of clause (i),
                (ii) by redesignating clause (ii) as (iv), and
                (iii) by inserting after clause (i) the following new 
            clauses:
                ``(ii) for 1992 and 1993, the amount determined under 
            this subparagraph for the preceding year increased by the 
            covered item update for such subsequent year;
                ``(iii) for 1994, the local purchase price computed 
            under subparagraph (A)(ii) for the item for the year, except 
            that such national limited purchase price may not exceed 100 
            percent of the median of all local purchase prices computed 
            for the item under such subparagraph for the year and may 
            not be less than 85 percent of the median of all local 
            purchase prices computed under such subparagraph for the 
            item for the year; and''.
        (3) Oxygen and oxygen equipment.--Section 1834(a)(9) (42 U.S.C. 
    1395m(a)(9)) is amended--
            (A) in subparagraph (A)(ii)(II), by striking ``1991 and 
        1992'' and inserting ``1991, 1992, 1993, and 1994''; and
            (B) in subparagraph (B)--
                (i) by striking ``and'' at the end of clause (i),
                (ii) by redesignating clause (ii) as (iv), and
                (iii) by inserting after clause (i) the following new 
            clauses:
                ``(ii) for 1992 and 1993, the amount determined under 
            this subparagraph for the preceding year increased by the 
            covered item update for such subsequent year;
                ``(iii) for 1994, the local monthly payment rate 
            computed under subparagraph (A)(ii) for the item for the 
            year, except that such national limited monthly payment rate 
            may not exceed 100 percent of the median of all local 
            monthly payment rates computed for the item under such 
            subparagraph for the year and may not be less than 85 
            percent of the median of all local monthly payment rates 
            computed for the item under such subparagraph for the year; 
            and''.
    (b) Effective Date.--The amendments made by this section shall apply 
to items furnished on or after January 1, 1994.
SEC. 13543. TREATMENT OF NEBULIZERS, ASPIRATORS, AND CERTAIN 
VENTILATORS.
    (a) In General.--Section 1834(a)(3)(A) (42 U.S.C. 1395m(a)(3)(A)) is 
amended by striking ``ventilators, aspirators, IPPB machines, and 
nebulizers'' and inserting ``IPPB machines and ventilators, excluding 
ventilators that are either continuous airway pressure devices or 
intermittent assist devices with continuous airway pressure devices''.
    (b) Payment for Accessories Relating to Nebulizers, Aspirators, and 
Certain Ventilators.--Section 1834(a)(2)(A) (42 U.S.C. 1395m(a)) is 
amended--
        (1) by striking ``or'' at the end of clause (i),
        (2) by adding ``or'' at the end of clause (ii), and
        (3) by inserting after clause (ii) the following new clause:
                ``(iii) which is an accessory used in conjunction with a 
            nebulizer, aspirator, or a ventilator excluded under 
            paragraph (3)(A),''.
    (c) Effective Date.--The amendments made by this section shall apply 
to items furnished on or after January 1, 1994.
SEC. 13544. PAYMENT FOR OSTOMY SUPPLIES AND OTHER SUPPLIES.
    (a) Ostomy Supplies, Tracheostomy Supplies, and Urologicals.--
        (1) In general.--Section 1834(h)(1) (42 U.S.C. 1395m(h)(1)) is 
    amended by adding at the end the following new subparagraph:
            ``(E) Exception for certain items.--Payment for ostomy 
        supplies, tracheostomy supplies, and urologicals shall be made 
        in accordance with subparagraphs (B) and (C) of section 
        1834(a)(2).''.
        (2) Conforming amendment.--Section 1834(h)(1)(B) (42 U.S.C. 
    1395m(h)(1)(B)) is amended by striking ``subparagraph (C),'' and 
    inserting ``subparagraphs (C) and (E),''.
        (3) Effective date.--The amendments made by this subsection 
    shall apply to items furnished on or after January 1, 1994.
    (b) Surgical Dressings.--
        (1) In general.--Section 1834 (42 U.S.C. 1395m) is amended by 
    adding at the end the following new subsection:
    ``(i) Payment for Surgical Dressings.--
        ``(1) In general.--Payment under this subsection for surgical 
    dressings (described in section 1861(s)(5)) shall be made in a lump 
    sum amount for the purchase of the item in an amount equal to 80 
    percent of the lesser of--
            ``(A) the actual charge for the item; or
            ``(B) a payment amount determined in accordance with the 
        methodology described in subparagraphs (B) and (C) of subsection 
        (a)(2) (except that in applying such methodology, the national 
        limited payment amount referred to in such subparagraphs shall 
        be initially computed based on local payment amounts using 
        average reasonable charges for the 12-month period ending 
        December 31, 1992, increased by the covered item updates 
        described in such subsection for 1993 and 1994).
        ``(2) Exceptions.--Paragraph (1) shall not apply to surgical 
    dressings that are--
            ``(A) furnished as an incident to a physician's professional 
        service; or
            ``(B) furnished by a home health agency.''.
        (2) Conforming amendment.--Section 1833(a)(1) (42 U.S.C. 
    1395l(a)(1)) is amended--
            (A) by striking ``and'' before ``(N)'';
            (B) with respect to the matter inserted by section 
        4155(b)(2)(B) of OBRA-1990--
                (i) by striking ``(M)'' and inserting ``, (O)'', and
                (ii) by transferring it and inserting it (as amended) 
            immediately before the semicolon at the end; and
            (C) by inserting before the semicolon at the end the 
        following: ``, and (P) with respect to surgical dressings, the 
        amounts paid shall be the amounts determined under section 
        1834(i)''.
        (3) Effective date.--The amendments made by this subsection 
    shall apply to items furnished on or after January 1, 1994.

SEC. 13545. PAYMENTS FOR TENS DEVICES.

    (a) In General.--Section 1834(a)(1)(D) (42 U.S.C. 1395m(a)(1)(D)) is 
amended by striking ``15 percent'' the second place it appears and 
inserting ``45 percent''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to items furnished on or after January 1, 1994.
SEC. 13546. PAYMENTS FOR ORTHOTICS, PROSTHETICS, AND PROSTHETIC DEVICES.
    Section 1834(h)(4)(A) (42 U.S.C. 1395m(h)(4)(A)) is amended--
        (1) in clause (i), by striking ``and'';
        (2) in clause (ii), by striking ``a subsequent year'' and 
    inserting ``1992 and 1993''; and
        (3) by adding at the end the following new clauses:
                ``(iii) for 1994 and 1995, 0 percent, and
                ``(iv) for a subsequent year, the percentage increase in 
            the consumer price index for all urban consumers (United 
            States city average) for the 12-month period ending with 
            June of the previous year;''.

                       Subpart E--Other Provisions

SEC. 13551. PAYMENTS FOR CLINICAL DIAGNOSTIC LABORATORY TESTS.
    (a) Update Freeze.--Section 1833(h)(2)(A)(ii) (42 U.S.C. 
1395l(h)(2)(A)(ii)) is amended--
        (1) by striking ``and'' at the end of subclause (II),
        (2) by striking the period at the end of subclause (III) and 
    inserting ``, and'', and
        (3) by adding at the end the following new subclause:
        ``(IV) the annual adjustment in the fee schedules determined 
    under clause (i) for each of the years 1994 and 1995 shall be 0 
    percent.''.
    (b) Lower Cap.--Section 1833(h)(4)(B) (42 U.S.C. 1395l(h)(4)(B)) is 
amended--
        (1) by striking ``and'' at the end of clause (iii),
        (2) by striking clause (iv) and inserting the following:
        ``(iv) after December 31, 1990, and before January 1, 1994, is 
    equal to 88 percent of such median,
        ``(v) after December 31, 1993, and before January 1, 1995, is 
    equal to 84 percent of such median,
        ``(vi) after December 31, 1994, and before January 1, 1996, is 
    equal to 80 percent of such median, and
        ``(vii) after December 31, 1995, is equal to 76 percent of such 
    median.''.
SEC. 13552. EXTENSION OF ALZHEIMER'S DISEASE DEMONSTRATION PROJECTS.
    Section 9342 of OBRA-1986, as amended by section 4164(a)(2) of OBRA-
1990, is amended--
        (1) in subsection (c)(1), by striking ``4 years'' and inserting 
    ``5 years''; and
        (2) in subsection (f)--
            (A) by striking ``$55,000,000'' and inserting 
        ``$58,000,000'', and
            (B) by striking ``$3,000,000'' and inserting ``$5,000,000''.

SEC. 13553. ORAL CANCER DRUGS.

    (a) New Coverage of Certain Self-Administered Anticancer Drugs.--
Section 1861(s)(2) (42 U.S.C. 1395(s)(2)) is amended--
        (1) by striking ``and'' at the end of subparagraph (O);
        (2) by adding ``and'' at the end of subparagraph (P); and
        (3) by adding at the end the following new subparagraph:
        ``(Q) an oral drug (which is approved by the Federal Food and 
    Drug Administration) prescribed for use as an anticancer 
    chemotherapeutic agent for a given indication, and containing an 
    active ingredient (or ingredients), which is the same indication and 
    active ingredient (or ingredients) as a drug which the carrier 
    determines would be covered pursuant to subparagraph (A) or (B) if 
    the drug could not be self-administered;''.
    (b) Uniform Coverage of ``Off-Label'' Anticancer Drugs.--Section 
1861(t) (42 U.S.C. 1395x(t)) is amended--
        (1) by inserting ``(1)'' after ``(t)'';
        (2) by striking ``(m)(5) of this section'' and inserting 
    ``(m)(5) and paragraph (2)''; and
        (3) by adding at the end the following new paragraph:
    ``(2)(A) For purposes of paragraph (1), the term `drugs' also 
includes any drugs or biologicals used in an anticancer chemotherapeutic 
regimen for a medically accepted indication (as described in 
subparagraph (B)).
    ``(B) In subparagraph (A), the term `medically accepted indication', 
with respect to the use of a drug, includes any use which has been 
approved by the Food and Drug Administration for the drug, and includes 
another use of the drug if--
        ``(i) the drug has been approved by the Food and Drug 
    Administration; and
        ``(ii)(I) such use is supported by one or more citations which 
    are included (or approved for inclusion) in one or more of the 
    following compendia: the American Hospital Formulary Service-Drug 
    Information, the American Medical Association Drug Evaluations, the 
    United States Pharmacopoeia-Drug Information, and other 
    authoritative compendia as identified by the Secretary, unless the 
    Secretary has determined that the use is not medically appropriate 
    or the use is identified as not indicated in one or more such 
    compendia, or
        ``(II) the carrier involved determines, based upon guidance 
    provided by the Secretary to carriers for determining accepted uses 
    of drugs, that such use is medically accepted based on supportive 
    clinical evidence in peer reviewed medical literature appearing in 
    publications which have been identified for purposes of this 
    subclause by the Secretary.
The Secretary may revise the list of compendia in clause (ii)(I) as is 
appropriate for identifying medically accepted indications for drugs.''.
    (c) Effective Date.--The amendments made by subsections (a) and (b) 
shall apply to items furnished on or after January 1, 1994.
SEC. 13554. CLARIFICATION OF COVERAGE OF CERTIFIED NURSE-MIDWIFE 
SERVICES PERFORMED OUTSIDE THE MATERNITY CYCLE.
    (a) In General.--Section 1861(gg)(2) (42 U.S.C. 1395x(gg)(2)) is 
amended by striking ``, and performs services'' and all that follows and 
inserting a period.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to services furnished on or after January 1, 1994.
SEC. 13555. INCREASE IN ANNUAL CAP ON AMOUNT OF MEDICARE PAYMENT FOR 
OUTPATIENT PHYSICAL THERAPY AND OCCUPATIONAL THERAPY SERVICES.
    (a) Increase in Annual Limitation.--Section 1833(g) (42 U.S.C. 
1395l(g)) is amended by striking ``$750'' and inserting ``$900'' each 
place it appears.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to services furnished on or after January 1, 1994.
SEC. 13556. RURAL HEALTH CLINICS AND FEDERALLY QUALIFIED HEALTH CENTERS.
    (a) In General.--Paragraph (4) of section 1861(aa) (42 U.S.C. 
1395x(aa)) is amended--
        (1) by striking ``or'' at the end of subparagraph (B);
        (2) by striking the period at the end of subparagraph (C) and 
    inserting ``; or''; and
        (3) by adding at the end the following new subparagraph:
        ``(D) is an outpatient health program or facility operated by a 
    tribe or tribal organization under the Indian Self-Determination Act 
    or by an urban Indian organization receiving funds under title V of 
    the Indian Health Care Improvement Act.''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
take effect as if included in the enactment of section 4161(a)(2)(C) of 
OBRA-1990.
SEC. 13557. EXTENSION OF MUNICIPAL HEALTH SERVICE DEMONSTRATION 
PROJECTS.
    Section 9215 of the Consolidated Omnibus Budget Reconciliation Act 
of 1985, as amended by section 6135 of OBRA-1989, is amended--
        (1) by striking ``December 31, 1993'' and inserting ``December 
    31, 1997'', and
        (2) in the second sentence, by inserting after ``beneficiary 
    costs,'' the following: ``costs to the medicaid program and other 
    payers, access to care, outcomes, beneficiary satisfaction, 
    utilization differences among the different populations served by 
    the projects,''.

             PART III--PROVISIONS RELATING TO PARTS A AND B

SEC. 13561. MEDICARE AS SECONDARY PAYER.

    (a) Extension of and Modifications to Data Match Program.--
        (1) Section 1862(b)(5)(C)(iii) (42 U.S.C. 1395y(b)(5)(C)(iii)) 
    is amended by striking ``1995'' and inserting ``1998''.
        (2) Section 6103(l)(12) of the Internal Revenue Code of 1986 is 
    amended--
            (A) in subparagraph (B)(i), by inserting ``, above an amount 
        (if any) specified by the Secretary of Health and Human 
        Services,'' after ``section 3401(a))'';
            (B) in subparagraph (B)(ii), in the matter preceding 
        subclause (I) by inserting ``, above an amount (if any) 
        specified by the Secretary of Health and Human Services,'' after 
        ``wages''; and
            (C) in subparagraph (F)--
                (i) in clause (i), by striking ``1995'' and inserting 
            ``1998'',
                (ii) in clause (ii)(I), by striking ``1994'' and 
            inserting ``1997'', and
                (iii) in clause (ii)(II), by striking ``1995'' and 
            inserting ``1998''.
    (b) Extension of Medicare Secondary Payer to Disabled 
Beneficiaries.--Section 1862(b)(1)(B)(iii) (42 U.S.C. 
1395y(b)(1)(B)(iii)) is amended by striking ``1995'' and inserting 
``1998''.
    (c) Extension of 18-month Rule for ESRD Beneficiaries.--Section 
1862(b)(1) (42 U.S.C. 1395y(b)(1)) is amended--
        (1) in the second sentence of subparagraph (C), by striking ``on 
    or before January 1, 1996'' and inserting ``before October 1, 
    1998'';
        (2) in each of subparagraphs (A)(iv) and (B)(ii)--
            (A) by striking ``Clause (i) shall not apply'' and inserting 
        ``Subparagraph (C) shall apply instead of clause (i)'', and
            (B) by inserting ``(without regard to entitlement under 
        section 226)'' after ``individual is, or''; and
        (3) in subparagraph (C), by striking ``benefits under this title 
    solely by reason of'' and inserting ``or eligible for benefits under 
    this title under'' each place it appears.
    (d) Application of Aggregation Rules.--
        (1) In general.--Section 1862(b)(1) (42 U.S.C. 1395y(b)(1)) is 
    amended by adding at the end the following new subparagraph:
            ``(E) General provisions.--For purposes of this subsection:
                ``(i) Aggregation rules.--

                    ``(I) All employers treated as a single employer 
                under subsection (a) or (b) of section 52 of the 
                Internal Revenue Code of 1986 shall be treated as a 
                single employer.
                    ``(II) All employees of the members of an affiliated 
                service group (as defined in section 414(m) of such 
                Code) shall be treated as employed by a single employer.
                    ``(III) Leased employees (as defined in section 
                414(n)(2) of such Code) shall be treated as employees of 
                the person for whom they perform services to the extent 
                they are so treated under section 414(n) of such Code.

            In applying sections of the Internal Revenue Code of 1986 
            under this clause, the Secretary shall rely upon regulations 
            and decisions of the Secretary of the Treasury respecting 
            such sections.''.
        (2) Conforming amendment.--Section 5000(b)(2) of the Internal 
    Revenue Code of 1986 (relating to large group health plans) is 
    amended by adding at the end the following: ``For purposes of the 
    preceding sentence--
            ``(A) all employers treated as a single employer under 
        subsection (a) or (b) of section 52 shall be treated as a single 
        employer,
            ``(B) all employees of the members of an affiliated service 
        group (as defined in section 414(m)) shall be treated as 
        employed by a single employer, and
            ``(C) leased employees (as defined in section 414(n)(2)) 
        shall be treated as employees of the person for whom they 
        perform services to the extent they are so treated under section 
        414(n). ''.
        (3) The amendments made by this subsection shall take effect 90 
    days after the date of the enactment of this Act.
    (e) Uniform Treatment of Current Employment Status.--
        (1) In general.--Section 1862(b)(1) (42 U.S.C. 1395y(b)(1)) is 
    amended--
            (A) in subparagraph (A)(i), by amending subclauses (I) and 
        (II) to read as follows:

                    ``(I) may not take into account that an individual 
                (or the individual's spouse) who is covered under the 
                plan by virtue of the individual's current employment 
                status with an employer is entitled to benefits under 
                this title under section 226(a), and
                    ``(II) shall provide that any individual age 65 or 
                over (and the individual's spouse age 65 or older) who 
                is covered under the plan by virtue of the individual's 
                current employment status with an employer shall be 
                entitled to the same benefits under the plan under the 
                same conditions as any such individual (or spouse) under 
                age 65.'';

            (B) in subparagraph (A)(ii), by striking ``unless the plan'' 
        and all that follows through ``employees'' and inserting 
        ``unless the plan is a plan of, or contributed to by, an 
        employer or employee organization that has 20 or more 
        individuals in current employment status'';
            (C) in subparagraph (A)(iii), by striking ``by virtue of 
        employment'' and all that follows through ``calendar year or'' 
        and inserting ``by virtue of current employment status with an 
        employer that does not have 20 or more individuals in current 
        employment status for each working day in each of 20 or more 
        calendar weeks in the current calendar year and'';
            (D) in subparagraph (A)(v), by inserting ``, without regard 
        to section 5000(d) of such Code'' before the period at the end 
        of each subparagraph;
            (E) in the heading of subparagraph (B), by striking 
        ``active'';
            (F) in subparagraph (B)(i), by striking ``clause (iv)(II)) 
        may not take into account that an active individual (as defined 
        in clause (iv)(I))'' and inserting ``clause (iv)) may not take 
        into account that an individual (or a member of the individual's 
        family) who is covered under the plan by virtue of the 
        individual's current employment status with an employer'';
            (G) by amending clause (iv) of subparagraph (B) to read as 
        follows:
                ``(iv) Large group health plan defined.--In this 
            subparagraph, the term `large group health plan' has the 
            meaning given such term in section 5000(b)(2) of the 
            Internal Revenue Code of 1986, without regard to section 
            5000(d) of such Code.''; and
            (H) by adding at the end of subparagraph (E), as added by 
        subsection (d)(1), the following:
                ``(ii) Current employment status defined.--An individual 
            has `current employment status' with an employer if the 
            individual is an employee, is the employer, or is associated 
            with the employer in a business relationship.
                ``(iii) Treatment of self-employed persons as 
            employers.--The term `employer' includes a self-employed 
            person.''.
        (2)(A) Section 5000 of the Internal Revenue Code of 1986 is 
    amended--
            (i) in subsection (a), by inserting ``(including a self-
        employed person)'' after ``employer'',
            (ii) by amending paragraph (1) of subsection (b) to read as 
        follows:
        ``(1) Group health plan.--The term `group health plan' means a 
    plan (including a self-insured plan) of, or contributed to by, an 
    employer (including a self-employed person) or employee organization 
    to provide health care (directly or otherwise) to the employees, 
    former employees, the employer, others associated or formerly 
    associated with the employer in a business relationship, or their 
    families.'', and
            (iii) in subsection (c), by striking ``of section 
        1862(b)(1)'' and inserting ``of paragraph (1), or with the 
        requirements of paragraph (2), of section 1862(b)''.
        (B) Section 6103(l)(12)(E)(ii) of such Code is amended to read 
    as follows:
                ``(ii) Group health plan.--The term `group health plan' 
            means any group health plan (as defined in section 
            5000(b)(1)).''.
    (f) Retroactive Exemption for Certain Situations Involving Religious 
Orders.--Section <!!>1862(b)(1)(D) of the Social Security Act applies, 
with respect to items and services furnished before October 1, 1989, to 
any claims that the Secretary of Health and Human Services had not 
identified as of that date as subject to the provisions of section 
1862(b) of such Act.

SEC. 13562. PHYSICIAN OWNERSHIP AND REFERRAL.

    (a) In General.--Section 1877 (42 U.S.C. 1395nn) is amended--
        (1) by amending subsections (a) through (e) to read as follows:
    ``(a) Prohibition of Certain Referrals.--
        ``(1) In general.--Except as provided in subsection (b), if a 
    physician (or an immediate family member of such physician) has a 
    financial relationship with an entity specified in paragraph (2), 
    then--
            ``(A) the physician may not make a referral to the entity 
        for the furnishing of designated health services for which 
        payment otherwise may be made under this title, and
            ``(B) the entity may not present or cause to be presented a 
        claim under this title or bill to any individual, third party 
        payor, or other entity for designated health services furnished 
        pursuant to a referral prohibited under subparagraph (A).
        ``(2) Financial relationship specified.--For purposes of this 
    section, a financial relationship of a physician (or an immediate 
    family member of such physician) with an entity specified in this 
    paragraph is--
            ``(A) except as provided in subsections (c) and (d), an 
        ownership or investment interest in the entity, or
            ``(B) except as provided in subsection (e), a compensation 
        arrangement (as defined in subsection (h)(1)) between the 
        physician (or an immediate family member of such physician) and 
        the entity.
    An ownership or investment interest described in subparagraph (A) 
    may be through equity, debt, or other means and includes an interest 
    in an entity that holds an ownership or investment interest in any 
    entity providing the designated health service.
    ``(b) General Exceptions to Both Ownership and Compensation 
Arrangement Prohibitions.--Subsection (a)(1) shall not apply in the 
following cases:
        ``(1) Physicians' services.--In the case of physicians' services 
    (as defined in section 1861(q)) provided personally by (or under the 
    personal supervision of) another physician in the same group 
    practice (as defined in subsection (h)(4)) as the referring 
    physician.
        ``(2) In-office ancillary services.--In the case of services 
    (other than durable medical equipment (excluding infusion pumps) and 
    parenteral and enteral nutrients, equipment, and supplies)--
            ``(A) that are furnished--
                ``(i) personally by the referring physician, personally 
            by a physician who is a member of the same group practice as 
            the referring physician, or personally by individuals who 
            are directly supervised by the physician or by another 
            physician in the group practice, and
                ``(ii)(I) in a building in which the referring physician 
            (or another physician who is a member of the same group 
            practice) furnishes physicians' services unrelated to the 
            furnishing of designated health services, or
                ``(II) in the case of a referring physician who is a 
            member of a group practice, in another building which is 
            used by the group practice--

                    ``(aa) for the provision of some or all of the 
                group's clinical laboratory services, or
                    ``(bb) for the centralized provision of the group's 
                designated health services (other than clinical 
                laboratory services),

            unless the Secretary determines other terms and conditions 
            under which the provision of such services does not present 
            a risk of program or patient abuse, and
            ``(B) that are billed by the physician performing or 
        supervising the services, by a group practice of which such 
        physician is a member under a billing number assigned to the 
        group practice, or by an entity that is wholly owned by such 
        physician or such group practice,
    if the ownership or investment interest in such services meets such 
    other requirements as the Secretary may impose by regulation as 
    needed to protect against program or patient abuse.
        ``(3) Prepaid plans.--In the case of services furnished by an 
    organization--
            ``(A) with a contract under section 1876 to an individual 
        enrolled with the organization,
            ``(B) described in section 1833(a)(1)(A) to an individual 
        enrolled with the organization,
            ``(C) receiving payments on a prepaid basis, under a 
        demonstration project under section 402(a) of the Social 
        Security Amendments of 1967 or under section 222(a) of the 
        Social Security Amendments of 1972, to an individual enrolled 
        with the organization, or
            ``(D) that is a qualified health maintenance organization 
        (within the meaning of section 1310(d) of the Public Health 
        Service Act) to an individual enrolled with the organization.
        ``(4) Other permissible exceptions.--In the case of any other 
    financial relationship which the Secretary determines, and specifies 
    in regulations, does not pose a risk of program or patient abuse.
    ``(c) General Exception Related Only to Ownership or Investment 
Prohibition for Ownership in Publicly Traded Securities and Mutual 
Funds.--Ownership of the following shall not be considered to be an 
ownership or investment interest described in subsection (a)(2)(A):
        ``(1) Ownership of investment securities (including shares or 
    bonds, debentures, notes, or other debt instruments) which may be 
    purchased on terms generally available to the public and which are--
            ``(A)(i) securities listed on the New York Stock Exchange, 
        the American Stock Exchange, or any regional exchange in which 
        quotations are published on a daily basis, or foreign securities 
        listed on a recognized foreign, national, or regional exchange 
        in which quotations are published on a daily basis, or
            ``(ii) traded under an automated interdealer quotation 
        system operated by the National Association of Securities 
        Dealers, and
            ``(B) in a corporation that had, at the end of the 
        corporation's most recent fiscal year, or on average during the 
        previous 3 fiscal years, stockholder equity exceeding 
        $75,000,000.
        ``(2) Ownership of shares in a regulated investment company as 
    defined in section 851(a) of the Internal Revenue Code of 1986, if 
    such company had, at the end of the company's most recent fiscal 
    year, or on average during the previous 3 fiscal years, total assets 
    exceeding $75,000,000.
    ``(d) Additional Exceptions Related Only to Ownership or Investment 
Prohibition.--The following, if not otherwise excepted under subsection 
(b), shall not be considered to be an ownership or investment interest 
described in subsection (a)(2)(A):
        ``(1) Hospitals in puerto rico.--In the case of designated 
    health services provided by a hospital located in Puerto Rico.
        ``(2) Rural provider.--In the case of designated health services 
    furnished in a rural area (as defined in section 1886(d)(2)(D)) by 
    an entity, if substantially all of the designated health services 
    furnished by such entity are furnished to individuals residing in 
    such a rural area.
        ``(3) Hospital ownership.--In the case of designated health 
    services provided by a hospital (other than a hospital described in 
    paragraph (1)) if--
            ``(A) the referring physician is authorized to perform 
        services at the hospital, and
            ``(B) the ownership or investment interest is in the 
        hospital itself (and not merely in a subdivision of the 
        hospital).
    ``(e) Exceptions Relating to Other Compensation Arrangements.--The 
following shall not be considered to be a compensation arrangement 
described in subsection (a)(2)(B):
        ``(1) Rental of office space; rental of equipment.--
            ``(A) Office space.--Payments made by a lessee to a lessor 
        for the use of premises if--
                ``(i) the lease is set out in writing, signed by the 
            parties, and specifies the premises covered by the lease,
                ``(ii) the space rented or leased does not exceed that 
            which is reasonable and necessary for the legitimate 
            business purposes of the lease or rental and is used 
            exclusively by the lessee when being used by the lessee, 
            except that the lessee may make payments for the use of 
            space consisting of common areas if such payments do not 
            exceed the lessee's pro rata share of expenses for such 
            space based upon the ratio of the space used exclusively by 
            the lessee to the total amount of space (other than common 
            areas) occupied by all persons using such common areas,
                ``(iii) the lease provides for a term of rental or lease 
            for at least 1 year,
                ``(iv) the rental charges over the term of the lease are 
            set in advance, are consistent with fair market value, and 
            are not determined in a manner that takes into account the 
            volume or value of any referrals or other business generated 
            between the parties,
                ``(v) the lease would be commercially reasonable even if 
            no referrals were made between the parties, and
                ``(vi) the lease meets such other requirements as the 
            Secretary may impose by regulation as needed to protect 
            against program or patient abuse.
            ``(B) Equipment.--Payments made by a lessee of equipment to 
        the lessor of the equipment for the use of the equipment if--
                ``(i) the lease is set out in writing, signed by the 
            parties, and specifies the equipment covered by the lease,
                ``(ii) the equipment rented or leased does not exceed 
            that which is reasonable and necessary for the legitimate 
            business purposes of the lease or rental and is used 
            exclusively by the lessee when being used by the lessee,
                ``(iii) the lease provides for a term of rental or lease 
            of at least 1 year,
                ``(iv) the rental charges over the term of the lease are 
            set in advance, are consistent with fair market value, and 
            are not determined in a manner that takes into account the 
            volume or value of any referrals or other business generated 
            between the parties,
                ``(v) the lease would be commercially reasonable even if 
            no referrals were made between the parties, and
                ``(vi) the lease meets such other requirements as the 
            Secretary may impose by regulation as needed to protect 
            against program or patient abuse.
        ``(2) Bona fide employment relationships.--Any amount paid by an 
    employer to a physician (or an immediate family member of such 
    physician) who has a bona fide employment relationship with the 
    employer for the provision of services if--
            ``(A) the employment is for identifiable services,
            ``(B) the amount of the remuneration under the employment--
                ``(i) is consistent with the fair market value of the 
            services, and
                ``(ii) is not determined in a manner that takes into 
            account (directly or indirectly) the volume or value of any 
            referrals by the referring physician,
            ``(C) the remuneration is provided pursuant to an agreement 
        which would be commercially reasonable even if no referrals were 
        made to the employer, and
            ``(D) the employment meets such other requirements as the 
        Secretary may impose by regulation as needed to protect against 
        program or patient abuse.
    Subparagraph (B)(ii) shall not prohibit the payment of remuneration 
    in the form of a productivity bonus based on services performed 
    personally by the physician (or an immediate family member of such 
    physician).
        ``(3) Personal service arrangements.--
            ``(A) In general.--Remuneration from an entity under an 
        arrangement (including remuneration for specific physicians' 
        services furnished to a nonprofit blood center) if--
                ``(i) the arrangement is set out in writing, signed by 
            the parties, and specifies the services covered by the 
            arrangement,
                ``(ii) the arrangement covers all of the services to be 
            provided by the physician (or an immediate family member of 
            such physician) to the entity,
                ``(iii) the aggregate services contracted for do not 
            exceed those that are reasonable and necessary for the 
            legitimate business purposes of the arrangement,
                ``(iv) the term of the arrangement is for at least 1 
            year,
                ``(v) the compensation to be paid over the term of the 
            arrangement is set in advance, does not exceed fair market 
            value, and except in the case of a physician incentive plan 
            described in subparagraph (B), is not determined in a manner 
            that takes into account the volume or value of any referrals 
            or other business generated between the parties,
                ``(vi) the services to be performed under the 
            arrangement do not involve the counseling or promotion or a 
            business arrangement or other activity that violates any 
            State or Federal law, and
                ``(vii) the arrangement meets such other requirements as 
            the Secretary may impose by regulation as needed to protect 
            against program or patient abuse.
            ``(B) Physician incentive plan exception.--
                ``(i) In general.--In the case of a physician incentive 
            plan (as defined in clause (ii)) between a physician and an 
            entity, the compensation may be determined in a manner 
            (through a withhold, capitation, bonus, or otherwise) that 
            takes into account directly or indirectly the volume or 
            value of any referrals or other business generated between 
            the parties, if the plan meets the following requirements:

                    ``(I) No specific payment is made directly or 
                indirectly under the plan to a physician or a physician 
                group as an inducement to reduce or limit medically 
                necessary services provided with respect to a specific 
                individual enrolled with the entity.
                    ``(II) In the case of a plan that places a physician 
                or a physician group at substantial financial risk as 
                determined by the Secretary pursuant to section 
                1876(i)(8)(A)(ii), the plan complies with any 
                requirements the Secretary may impose pursuant to such 
                section.
                    ``(III) Upon request by the Secretary, the entity 
                provides the Secretary with access to descriptive 
                information regarding the plan, in order to permit the 
                Secretary to determine whether the plan is in compliance 
                with the requirements of this clause.

                ``(ii) Physician incentive plan defined.--For purposes 
            of this subparagraph, the term `physician incentive plan' 
            means any compensation arrangement between an entity and a 
            physician or physician group that may directly or indirectly 
            have the effect of reducing or limiting services provided 
            with respect to individuals enrolled with the entity.
        ``(4) Remuneration unrelated to the provision of designated 
    health services.--In the case of remuneration which is provided by a 
    hospital to a physician if such remuneration does not relate to the 
    provision of designated health services.
        ``(5) Physician recruitment.--In the case of remuneration which 
    is provided by a hospital to a physician to induce the physician to 
    relocate to the geographic area served by the hospital in order to 
    be a member of the medical staff of the hospital, if--
            ``(A) the physician is not required to refer patients to the 
        hospital,
            ``(B) the amount of the remuneration under the arrangement 
        is not determined in a manner that takes into account (directly 
        or indirectly) the volume or value of any referrals by the 
        referring physician, and
            ``(C) the arrangement meets such other requirements as the 
        Secretary may impose by regulation as needed to protect against 
        program or patient abuse.
        ``(6) Isolated transactions.--In the case of an isolated 
    financial transaction, such as a one-time sale of property or 
    practice, if--
            ``(A) the requirements described in subparagraphs (B) and 
        (C) of paragraph (2) are met with respect to the entity in the 
        same manner as they apply to an employer, and
            ``(B) the transaction meets such other requirements as the 
        Secretary may impose by regulation as needed to protect against 
        program or patient abuse.
        ``(7) Certain group practice arrangements with a hospital.--
            ``(A) In general.--An arrangement between a hospital and a 
        group under which designated health services are provided by the 
        group but are billed by the hospital if--
                ``(i) with respect to services provided to an inpatient 
            of the hospital, the arrangement is pursuant to the 
            provision of inpatient hospital services under section 
            1861(b)(3),
                ``(ii) the arrangement began before December 19, 1989, 
            and has continued in effect without interruption since such 
            date,
                ``(iii) with respect to the designated health services 
            covered under the arrangement, substantially all of such 
            services furnished to patients of the hospital are furnished 
            by the group under the arrangement,
                ``(iv) the arrangement is pursuant to an agreement that 
            is set out in writing and that specifies the services to be 
            provided by the parties and the compensation for services 
            provided under the agreement,
                ``(v) the compensation paid over the term of the 
            agreement is consistent with fair market value and the 
            compensation per unit of services is fixed in advance and is 
            not determined in a manner that takes into account the 
            volume or value of any referrals or other business generated 
            between the parties,
                ``(vi) the compensation is provided pursuant to an 
            agreement which would be commercially reasonable even if no 
            referrals were made to the entity, and
                ``(vii) the arrangement between the parties meets such 
            other requirements as the Secretary may impose by regulation 
            as needed to protect against program or patient abuse.
        ``(8) Payments by a physician for items and services.--Payments 
    made by a physician--
            ``(A) to a laboratory in exchange for the provision of 
        clinical laboratory services, or
            ``(B) to an entity as compensation for other items or 
        services if the items or services are furnished at a price that 
        is consistent with fair market value.'';
        (2) by amending subsection (h) to read as follows:
    ``(h) Definitions and Special Rules.--For purposes of this section:
        ``(1) Compensation arrangement; remuneration.--(A) The term 
    `compensation arrangement' means any arrangement involving any 
    remuneration between a physician (or an immediate family member of 
    such physician) and an entity other than an arrangement involving 
    only remuneration described in subparagraph (C).
        ``(B) The term `remuneration' includes any remuneration, 
    directly or indirectly, overtly or covertly, in cash or in kind.
        ``(C) Remuneration described in this subparagraph is any 
    remuneration consisting of any of the following:
            ``(i) The forgiveness of amounts owed for inaccurate tests 
        or procedures, mistakenly performed tests or procedures, or the 
        correction of minor billing errors.
            ``(ii) The provision of items, devices, or supplies that are 
        used solely to--
                ``(I) collect, transport, process, or store specimens 
            for the entity providing the item, device, or supply, or
                ``(II) order or communicate the results of tests or 
            procedures for such entity.
            ``(iii) A payment made by an insurer or a self-insured plan 
        to a physician to satisfy a claim, submitted on a fee for 
        service basis, for the furnishing of health services by that 
        physician to an individual who is covered by a policy with the 
        insurer or by the self-insured plan, if--
                ``(I) the health services are not furnished, and the 
            payment is not made, pursuant to a contract or other 
            arrangement between the insurer or the plan and the 
            physician,
                ``(II) the payment is made to the physician on behalf of 
            the covered individual and would otherwise be made directly 
            to such individual,
                ``(III) the amount of the payment is set in advance, 
            does not exceed fair market value, and is not determined in 
            a manner that takes into account directly or indirectly the 
            volume or value of any referrals, and
                ``(IV) the payment meets such other requirements as the 
            Secretary may impose by regulation as needed to protect 
            against program or patient abuse.
        ``(2) Employee.--An individual is considered to be `employed by' 
    or an `employee' of an entity if the individual would be considered 
    to be an employee of the entity under the usual common law rules 
    applicable in determining the employer-employee relationship (as 
    applied for purposes of section 3121(d)(2) of the Internal Revenue 
    Code of 1986).
        ``(3) Fair market value.--The term `fair market value' means the 
    value in arms length transactions, consistent with the general 
    market value, and, with respect to rentals or leases, the value of 
    rental property for general commercial purposes (not taking into 
    account its intended use) and, in the case of a lease of space, not 
    adjusted to reflect the additional value the prospective lessee or 
    lessor would attribute to the proximity or convenience to the lessor 
    where the lessor is a potential source of patient referrals to the 
    lessee.
        ``(4) Group practice.--
            ``(A) Definition of group practice.--The term `group 
        practice' means a group of 2 or more physicians legally 
        organized as a partnership, professional corporation, 
        foundation, not-for-profit corporation, faculty practice plan, 
        or similar association--
                ``(i) in which each physician who is a member of the 
            group provides substantially the full range of services 
            which the physician routinely provides, including medical 
            care, consultation, diagnosis, or treatment, through the 
            joint use of shared office space, facilities, equipment and 
            personnel,
                ``(ii) for which substantially all of the services of 
            the physicians who are members of the group are provided 
            through the group and are billed under a billing number 
            assigned to the group and amounts so received are treated as 
            receipts of the group,
                ``(iii) in which the overhead expenses of and the income 
            from the practice are distributed in accordance with methods 
            previously determined,
                ``(iv) except as provided in subparagraph (B)(i), in 
            which no physician who is a member of the group directly or 
            indirectly receives compensation based on the volume or 
            value of referrals by the physician,
                ``(v) in which members of the group personally conduct 
            no less than 75 percent of the physician-patient encounters 
            of the group practice, and
                ``(vi) which meets such other standards as the Secretary 
            may impose by regulation.
            ``(B) Special rules.--
                ``(i) Profits and productivity bonuses.--A physician in 
            a group practice may be paid a share of overall profits of 
            the group, or a productivity bonus based on services 
            personally performed or services incident to such personally 
            performed services, so long as the share or bonus is not 
            determined in any manner which is directly related to the 
            volume or value of referrals by such physician.
                ``(ii) Faculty practice plans.--In the case of a faculty 
            practice plan associated with a hospital, institution of 
            higher education, or medical school with an approved medical 
            residency training program in which physician members may 
            provide a variety of different specialty services and 
            provide professional services both within and outside the 
            group, as well as perform other tasks such as research, 
            subparagraph (A) shall be applied only with respect to the 
            services provided within the faculty practice plan.
        ``(5) Referral; referring physician.--
            ``(A) Physicians' services.--Except as provided in 
        subparagraph (C), in the case of an item or service for which 
        payment may be made under part B, the request by a physician for 
        the item or service, including the request by a physician for a 
        consultation with another physician (and any test or procedure 
        ordered by, or to be performed by (or under the supervision of) 
        that other physician), constitutes a `referral' by a `referring 
        physician'.
            ``(B) Other items.--Except as provided in subparagraph (C), 
        the request or establishment of a plan of care by a physician 
        which includes the provision of the designated health service 
        constitutes a `referral' by a `referring physician'.
            ``(C) Clarification respecting certain services integral to 
        a consultation by certain specialists.--A request by a 
        pathologist for clinical diagnostic laboratory tests and 
        pathological examination services, a request by a radiologist 
        for diagnostic radiology services, and a request by a radiation 
        oncologist for radiation therapy, if such services are furnished 
        by (or under the supervision of) such pathologist, radiologist, 
        or radiation oncologist pursuant to a consultation requested by 
        another physician does not constitute a `referral' by a 
        `referring physician'.
        ``(6) Designated health services.--The term `designated health 
    services' means any of the following items or services:
            ``(A) Clinical laboratory services.
            ``(B) Physical therapy services.
            ``(C) Occupational therapy services.
            ``(D) Radiology or other diagnostic services.
            ``(E) Radiation therapy services.
            ``(F) Durable medical equipment.
            ``(G) Parenteral and enteral nutrients, equipment, and 
        supplies.
            ``(H) Prosthetics, orthotics, and prosthetic devices.
            ``(I) Home health services.
            ``(J) Outpatient prescription drugs.
            ``(K) Inpatient and outpatient hospital services.'';
        (3) in subsection (f), by striking ``clinical laboratory 
    services'' and inserting ``designated health services''; and
        (4) in paragraph (1) of subsection (g), by striking ``clinical 
    laboratory service'' and inserting ``designated health service''.
    (b) Effective Dates.--
        (1) In general.--Except as provided in paragraph (2), the 
    amendments made by this section shall apply to referrals--
            (A) made on or after January 1, 1992, in the case of 
        clinical laboratory services, and
            (B) made after December 31, 1994, in the case of other 
        designated health services.
        (2) Exceptions.--With respect to referrals made for clinical 
    laboratory services on or before December 31, 1994--
            (A) the requirements of clauses (iv) and (v) of section 
        1877(h)(4)(A) of the Social Security Act, as amended by this 
        section, shall not apply; and
            (B) the second sentence of subsection (a)(2), and 
        subsections (b)(2)(B), (c), (d)(2), (e)(1), and (h)(4)(B) of 
        section 1877 of such Act, as in effect on the day before the 
        date of the enactment of this Act, shall apply (instead of the 
        corresponding provision in such section as so amended).

SEC. 13563. DIRECT GRADUATE MEDICAL EDUCATION.

    (a) Elimination of Cost-of-Living Update in per Resident Amounts for 
Direct Medical Education.--Section 1886(h) (42 U.S.C. 1395ww(h)) is 
amended--
        (1) in paragraph (2)(D)--
            (A) by striking ``For each'' and inserting ``(i) Except as 
        provided in clause (ii), for each'', and
            (B) by adding at the end the following new clause:
            ``(ii) For cost reporting periods beginning during fiscal 
        year 1994 or fiscal year 1995, the approved FTE resident amount 
        for a hospital shall not be updated under clause (i) for a 
        resident who is not a primary care resident (as defined in 
        paragraph (5)(H)) or a resident enrolled in an approved medical 
        residency training program in obstetrics and gynecology.''; and
        (2) in paragraph (5)--
            (A) by redesignating subparagraph (H) as subparagraph (I); 
        and
            (B) by inserting after subparagraph (G) the following new 
        subparagraph:
            ``(H) Primary care resident.--The term `primary care 
        resident' means a resident enrolled in an approved medical 
        residency training program in family medicine, general internal 
        medicine, general pediatrics, preventive medicine, geriatric 
        medicine, or osteopathic general practice.''.
    (b) Initial Residency Period.--
        (1) In general.--Section 1886(h)(5)(F) (42 U.S.C. 
    1395ww(h)(5)(F)) is amended--
            (A) by striking ``plus one year'', and
            (B) in clause (ii), by inserting ``or a preventive medicine 
        residency or fellowship program'' after ``fellowship program''.
        (2) Effective dates.--The amendments made by paragraphs (1)(A) 
    and (1)(B) shall take effect on July 1, 1995, and the date of the 
    enactment of this Act, respectively.
    (c) Adjustment for Publicly-Funded Family Practice Residency 
Programs.--
        (1) In general.--Section 1886(h)(5) (42 U.S.C. 1395ww(h)(5)), as 
    amended by subsection (a), is amended by adding at the end the 
    following new subparagraph:
            ``(J) Adjustments for certain family practice residency 
        programs.--
                ``(i) In general.--In the case of an approved medical 
            residency training program (meeting the requirements of 
            clause (ii)) of a hospital which received funds from the 
            United States, a State, or a political subdivision of a 
            State or an instrumentality of such a State or political 
            subdivision (other than payments under this title or a State 
            plan under title XIX) for the program during the cost 
            reporting period that began during fiscal year 1984, the 
            Secretary shall--

                    ``(I) provide for an average amount under paragraph 
                (2)(A) that takes into account the Secretary's estimate 
                of the amount that would have been recognized as 
                reasonable under this title if the hospital had not 
                received such funds, and
                    ``(II) reduce the payment amount otherwise provided 
                under this subsection in an amount equal to the 
                proportion of such program funds received during the 
                cost reporting period involved that is allocable to this 
                title.

                ``(ii) Additional requirements.--A hospital's approved 
            medical residency program meets the requirements of this 
            clause if--

                    ``(I) the program is limited to training for family 
                and community medicine;
                    ``(II) the program is the only approved medical 
                residency program of the hospital; and
                    ``(III) the average amount determined under 
                paragraph (2)(A) for the hospital (as determined without 
                regard to the increase in such amount described in 
                clause (i)(I)) does not exceed $10,000.''.

        (2) Effective date.--The amendment made by paragraph (1) shall 
    apply to payments under section 1886(h) of the Social Security Act 
    for cost reporting periods beginning on or after October 1, 1992.
    (d) Adjustment in GME Base-Year Costs of Federal Insurance 
Contributions Act.--
        (1) In general.--In determining the amount of payment to be made 
    under section 1886(h) of the Social Security Act in the case of a 
    hospital described in paragraph (2) for cost reporting periods 
    beginning on or after October 1, 1992, the Secretary of Health and 
    Human Services shall redetermine the approved FTE resident amount to 
    reflect the amount that would have been paid the hospital if, during 
    the hospital's base cost reporting period, the hospital had been 
    liable for FICA taxes or for contributions to the retirement system 
    of a State, a political subdivision of a State, or an 
    instrumentality of such a State or political subdivision with 
    respect to interns and residents in its medical residency training 
    program.
        (2) Hospitals affected.--A hospital described in this paragraph 
    is a hospital that did not pay FICA taxes with respect to interns 
    and residents in its medical residency training program during the 
    hospital's base cost reporting period, but is required to pay FICA 
    taxes or make contributions to a retirement system described in 
    paragraph (1) with respect to such interns and residents because of 
    the amendments made by section 11332(b) of OBRA-1990.
        (3) Definitions.--In this subsection:
            (A) The ``base cost reporting period'' for a hospital is the 
        hospital's cost reporting period that began during fiscal year 
        1984.
            (B) The term ``FICA taxes'' means, with respect to a 
        hospital, the taxes under section 3111 of the Internal Revenue 
        Code of 1986.
SEC. 13564. REDUCTION IN PAYMENTS FOR HOME HEALTH SERVICES.
    (a) In General.--
        (1) No changes in cost limits.--The Secretary of Health and 
    Human Services shall not provide for any change in the per visit 
    cost limits for home health services under section 1861(v)(1)(L) of 
    such Act for cost reporting periods beginning on or after July 1, 
    1994, and before July 1, 1996, except as may be necessary to take 
    into account the amendment made by subsection (b)(1). The effect of 
    the preceding sentence shall not be considered by the Secretary in 
    making adjustments pursuant to section 1861(v)(1)(L)(ii) of such Act 
    to the payment limits for such services during such cost reporting 
    periods.
        (2) Delay in updates.--Section 1861(v)(1)(L)(iii) (42 U.S.C. 
    1395x(v)(1)(L)(iii)) is amended by striking ``thereafter,'' and 
    inserting ``thereafter (but not for cost reporting periods beginning 
    on or after July 1, 1994, and before July 1, 1996),''.
    (b) Elimination of Add-On for Overhead of Hospital-Based Home Health 
Agencies.--
        (1) General rule.--The first sentence of section 
    1861(v)(1)(L)(ii) (42 U.S.C. 1395x(v)(1)(L)(ii)) is amended by 
    striking ``, with appropriate adjustment for administrative and 
    general costs of hospital-based agencies''.
        (2) Effective date.--The amendment made by paragraph (1) shall 
    apply to cost reporting periods beginning on or after October 1, 
    1993.

SEC. 13565. IMMUNOSUPPRESSIVE DRUG THERAPY.

    Section 1861(s)(2)(J) (42 U.S.C. 1395x(s)(2)(J)) is amended by 
striking ``title, within'' and all that follows and inserting the 
following: ``title, but only in the case of drugs furnished--
            ``(i) before 1995, within 12 months after the date of the 
        transplant procedure,
            ``(ii) during 1995, within 18 months after the date of the 
        transplant procedure,
            ``(iii) during 1996, within 24 months after the date of the 
        transplant procedure,
            ``(iv) during 1997, within 30 months after the date of the 
        transplant procedure, and
            ``(v) during any year after 1997, within 36 months after the 
        date of the transplant procedure;''.
SEC. 13566. REDUCTION IN PAYMENTS FOR ERYTHROPOIENTIN.
    (a) In General.--Section 1881(b) (42 U.S.C. 1395rr(b)) is amended--
        (1) in paragraph (1)(C), by striking ``1861(s)(2)(Q)'' and 
    inserting ``1861(s)(2)(P)''; and
        (2) in paragraph (11)(B)(ii)(I)--
            (A) by striking ``1991'' and inserting ``1994'', and
            (B) by striking ``$11'' and inserting ``$10''.
    (b) Self-Administration of Erythropoientin.--Subparagraph (P) of 
section 1861(s)(2) (42 U.S.C. 1395x(s)(2)) is amended--
        (1) by striking ``home'', and
        (2) by moving such subparagraph two ems to the left.
    (c) Effective Date.--The amendments made by this section shall apply 
to erythropoietin furnished on or after January 1, 1994.
SEC. 13567. EXTENSION OF SOCIAL HEALTH MAINTENANCE ORGANIZATION 
DEMONSTRATIONS.
    (a) Extension of Current Waivers.--Section 4018(b) of OBRA-1987, as 
amended by section 4207(b)(4)(B) of OBRA-1990, is amended--
        (1) in paragraph (1) by striking ``December 31, 1995'' and 
    inserting ``December 31, 1997''; and
        (2) in paragraph (4) by striking ``March 31, 1996'' and 
    inserting ``March 31, 1998''.
    (b) Expansion of Demonstrations.--Section 2355 of the Deficit 
Reduction Act of 1984 is amended--
        (1) in the last sentence of subsection (a) by striking ``12 
    months'' and inserting ``36 months''; and
        (2) in subsection (b)(1)(B)--
            (A) by striking ``or'' at the end of clause (iii); and
            (B) by redesignating clause (iv) as clause (v) and inserting 
        after clause (iii) the following new clause:
                ``(iv) integrating acute and chronic care management for 
            patients with end-stage renal disease through expanded 
            community care case management services (and for purposes of 
            a demonstration project conducted under this clause, any 
            requirement under a waiver granted under this section that a 
            project disenroll individuals who develop end-stage renal 
            disease shall not apply); or''.
    (c) Expansion of Number of Members Per Site.--The Secretary of 
Health and Human Services may not impose a limit of less than 12,000 on 
the number of individuals that may participate in a project conducted 
under section 2355 of the Deficit Reduction Act of 1984.
    (d) Effective Date.--The amendments made by this section shall take 
effect as if included in the enactment of OBRA-1990.

SEC. 13568. TIMING OF CLAIMS PAYMENT.

    (a) In General.--Sections 1816(c)(3)(B) (42 U.S.C. 1395h(c)(3)(B)) 
and 1842(c)(3)(B) (42 U.S.C. 1395u(c)(3)(B)) are each amended by 
striking clauses (i) and (ii) and inserting the following:
        ``(i) with respect to claims submitted electronically as 
    prescribed by the Secretary, 13 days, and
        ``(ii) with respect to claims submitted otherwise, 26 days.''.
    (b) Time Limit of 30 Days for Clean Claims.--Sections 
1816(c)(2)(B)(ii) (42 U.S.C. 1395h(c)(2)(B)(ii)) and 1842(c)(2)(B)(ii) 
(42 U.S.C. 1395u(c)(2)(B)(ii)) are each amended--
        (1) in subclause (IV), by striking ``period,'' and inserting 
    ``period ending on or before September 30, 1993,'', and
        (2) by adding at the end the following new subclause:
            ``(V) with respect to claims received in the 12-month period 
        beginning October 1, 1993, and claims received in any succeeding 
        12-month period, 30 calendar days.''.
    (c) Effective Date.--The amendments made by this section shall apply 
to claims received on or after October 1, 1993.

SEC. 13569. EXTENSION OF WAIVER FOR WATTS HEALTH FOUNDATION.

    Section 9312(c)(3)(D) of OBRA-1986, as added by section 4018(d) of 
OBRA-1987 and as amended by section 6212(a)(1) of OBRA-1989, is amended 
by striking ``1994'' and inserting ``1996''.

              PART IV--PROVISION RELATING TO PART B PREMIUM

SEC. 13571. PART B PREMIUM.

    Section 1839 (42 U.S.C. 1395r) is amended--
        (1) in subsection (e)(1)(A), by striking ``December 1983 and 
    prior to January 1991 shall be an amount equal to 50 percent'' and 
    inserting ``after December 1995 and prior to January 1999 shall be 
    an amount equal to 50 percent'', and
        (2) in subsection (e)(2), by striking ``1991'' and inserting 
    ``1998''.

                 PART V--PROVISION RELATING TO DATA BANK

SEC. 13581. MEDICARE AND MEDICAID COVERAGE DATA BANK.
    (a) Establishment of Medicare and Medicaid Coverage Data Bank.--Part 
A of title XI (42 U.S.C. 1301 et seq.) is amended by adding at the end 
the following new section:


                ``MEDICARE AND MEDICAID COVERAGE DATA BANK

    ``Sec. 1144. (a) Establishment of Data Bank.--The Secretary shall 
establish a Medicare and Medicaid Coverage Data Bank (hereafter in this 
section referred to as the `Data Bank') to--
        ``(1) further the purposes of section 1862(b) in the 
    identification of, and collection from, third parties responsible 
    for payment for health care items and services furnished to medicare 
    beneficiaries, and
        ``(2) assist in the identification of, and the collection from, 
    third parties responsible for the reimbursement of costs incurred by 
    any State plan under title XIX with respect to medicaid 
    beneficiaries, upon request by the State agency described in section 
    1902(a)(5) administering such plan.
    ``(b) Information in Data Bank.--
        ``(1) In general.--The Data Bank shall contain information 
    obtained pursuant to section 6103(l)(12) of the Internal Revenue 
    Code of 1986 and subsection (c).
        ``(2) Disclosure of information in data bank.--The Secretary is 
    authorized until September 30, 1998--
            ``(A) (subject to the restriction in subparagraph (D)(i) of 
        section 6103(l)(12) of the Internal Revenue Code of 1986) to 
        disclose any information in the Data Bank obtained pursuant to 
        such section solely for the purposes of such section, and
            ``(B) (subject to the restriction in subsection (c)(7)) to 
        disclose any other information in the Data Bank to any State 
        agency described in section 1902(a)(5), employer, or group 
        health plan solely for the purposes described in subsection (a).
    ``(c) Requirement That Employers Report Information.--
        ``(1) Reporting requirement.--
            ``(A) In general.--Any employer described in paragraph (2) 
        shall report to the Secretary (in such form and manner as the 
        Secretary determines will minimize the burden of such reporting) 
        with respect to each electing individual the information 
        required under paragraph (5) for each calendar year beginning on 
        or after January 1, 1994, and before January 1, 1998.
            ``(B) Special rule.--To the extent a group health plan 
        provides information required under paragraph (5) in a form and 
        manner specified by the Secretary (in consultation with the 
        Secretary of Labor) on behalf of an employer in accordance with 
        section 101(f) of the Employee Retirement Income Security Act of 
        1974, the employer has complied with the reporting requirement 
        under subparagraph (A) with respect to the reporting of such 
        information.
        ``(2) Employer described.--An employer is described in this 
    paragraph if such employer has, or contributes to, a group health 
    plan, with respect to which at least 1 employee of such employer is 
    an electing individual.
        ``(3) Electing individual.--For purposes of this subsection, the 
    term `electing individual' means an individual associated or 
    formerly associated with the employer in a business relationship who 
    elects coverage under the employer's group health plan.
        ``(4) Certain individuals excluded.--For purposes of this 
    subsection, an individual providing service referred to in section 
    3121(a)(7)(B) of the Internal Revenue Code of 1986 shall not be 
    considered an employee or electing individual with respect to an 
    employer.
        ``(5) Information required.--For purposes of paragraph (1), each 
    employer shall provide the following information:
            ``(A) The name and TIN of the electing individual.
            ``(B) The type of group health plan coverage (single or 
        family) elected by the electing individual.
            ``(C) The name, address, and identifying number of the group 
        health plan elected by such electing individual.
            ``(D) The name and TIN of each other individual covered 
        under the group health plan pursuant to such election.
            ``(E) The period during which such coverage is elected.
            ``(F) The name, address, and TIN of the employer.
        ``(6) Time of filing.--For purposes of determining the date for 
    filing the report under paragraph (1), such report shall be treated 
    as a statement described in section 6051(d) of the Internal Revenue 
    Code of 1986.
        ``(7) Limits on disclosure of information reported.--
            ``(A) In general.--The disclosure of the information 
        reported under paragraph (1) shall be restricted by the 
        Secretary under rules similar to the rules of subsections (a) 
        and (p) of section 6103 of the Internal Revenue Code of 1986.
            ``(B) Penalty for unauthorized willful disclosure of 
        information.--The unauthorized disclosure of any information 
        reported under paragraph (1) shall be subject to the penalty 
        described in paragraph (1), (2), (3), or (4) of section 7213(a) 
        of such Code.
        ``(9) Penalty for failure to report.--In the case of the failure 
    of an employer (other than a Federal or other governmental entity) 
    to report under paragraph (1)(A) with respect to each electing 
    individual, the Secretary shall impose a penalty as described in 
    part II of subchapter B of chapter 68 of the Internal Revenue Code 
    of 1986.
    ``(d) Fees for Data Bank Services.--The Secretary shall establish 
fees for services provided under this section which shall remain 
available, without fiscal year limitation, to the Secretary to cover the 
administrative costs to the Data Bank of providing such services.
    ``(f) Definitions.--In this section:
        ``(1) Medicare beneficiary.--The term `medicare beneficiary' 
    means an individual entitled to benefits under part A, or enrolled 
    under part B, of title XVIII, but does not include such an 
    individual enrolled in part A under section 1818.
        ``(2) Medicaid beneficiary.--The term `medicaid beneficiary' 
    means an individual entitled to benefits under a State plan for 
    medical assistance under title XIX (including a State plan operating 
    under a statewide waiver under section 1115).
        ``(3) Group health plan.--The term `group health plan' shall 
    have the meaning given to such term by section 5000(b)(1) of the 
    Internal Revenue Code of 1986.
        ``(4) TIN.--The term `TIN' shall have the meaning given to such 
    term by section 7701(a)(41) of such Code.''.
    (b) Conforming Amendments.--
        (1) Medicare.--Section 1862(b)(5) (42 U.S.C. 1395y(b)(5)) is 
    amended--
            (A) in subparagraph (B), by striking ``under subparagraph 
        (A)'' and all that follows and inserting ``under--
                ``(i) subparagraph (A), and
                ``(ii) section 1144,
        for purposes of carrying out this subsection.'', and
            (B) in subparagraph (C)(i), by striking ``subparagraph (B)'' 
        and inserting ``subparagraph (B)(i)''.
        (2) Medicaid.--Section 1902(a)(25)(A)(i) (42 U.S.C. 
    1396a(a)(25)(A)(i)) is amended by striking ``(as specified'' and 
    inserting ``(including the use of information collected by the 
    Medicare and Medicaid Coverage Data Bank under section 1144 and any 
    additional measures as specified''.
    (c) Conforming Amendment Relating to Data Matches.--Subsection 
(a)(8)(B) of section 552a of title 5, United States Code, is amended--
        (1) in clause (v), by striking ``; or'' at the end;
        (2) in clause (vi), by striking the semicolon at the end and 
    inserting ``; or''; and
        (3) by adding at the end the following new clause:
                ``(vii) matches performed pursuant to section 
            6103(l)(12) of the Internal Revenue Code of 1986 and section 
            1144 of the Social Security Act;''.
    (d) Effective Date.--The amendments made by this section shall take 
effect on January 1, 1994.

                         Subchapter B--Medicaid

SEC. 13600. REFERENCES IN SUBCHAPTER; TABLE OF CONTENTS OF SUBCHAPTER.
    (a) Amendments to Social Security Act.--Except as otherwise 
specifically provided, whenever in this subchapter an amendment is 
expressed in terms of an amendment to or repeal of a section or other 
provision, the reference shall be considered to be made to that section 
or other provision of the Social Security Act.
    (b) References to OBRA.--In this subchapter, the terms ``OBRA-
1986'', ``OBRA-1987'', ``OBRA-1989'', and ``OBRA-1990'' refer to the 
Omnibus Budget Reconciliation Act of 1986 (Public Law 99-509), the 
Omnibus Budget Reconciliation Act of 1987 (Public Law 100-203), the 
Omnibus Budget Reconciliation Act of 1989 (Public Law 101-239), and the 
Omnibus Budget Reconciliation Act of 1990 (Public Law 101-508), 
respectively.
    (c) Table of Contents of Subchapter.--The table of contents of this 
subchapter is as follows:

Sec. 13600. References in subchapter; table of contents of subchapter.

                            Part I--Services

Sec. 13601. Personal care services furnished outside the home as 
optional benefit.
Sec. 13602. Additional Federal savings through modifications to drug 
rebate program.
Sec. 13603. Optional medicaid coverage of TB-related services for 
certain TB-infected individuals.
Sec. 13604. Limiting Federal medicaid matching payment to bona fide 
emergency services for undocumented aliens.
Sec. 13605. Coverage of nurse-midwife services performed outside the 
maternity cycle.
Sec. 13606. Treatment of certain clinics as Federally-qualified health 
centers.

                          Part II--Eligibility

Sec. 13611. Transfers of assets; treatment of certain trusts.
Sec. 13612. Medicaid estate recoveries.

                           Part III--Payments

Sec. 13621. Assuring proper payments to disproportionate share 
hospitals.
Sec. 13622. Liability of third parties to pay for care and services.
Sec. 13623. Medical child support.
Sec. 13624. Application of medicare rules limiting certain physician 
referrals.
Sec. 13625. State medicaid fraud control.

                         Part IV--Immunizations

Sec. 13631. Medicaid pediatric immunization provisions.
Sec. 13632. National Vaccine Injury Compensation Program amendments.

                          Part V--Miscellaneous

Sec. 13641. Increase in limit on Federal medicaid matching payments to 
Puerto Rico and other territories.
Sec. 13642. Extension of moratorium on treatment of certain facilities 
as institutions for mental diseases.
Sec. 13643. Demonstration projects.
Sec. 13644. Extension of period of applicability of enrollment mix 
requirement to certain health maintenance organizations providing 
services under Dayton Area Health Plan.

                            PART I--SERVICES

SEC. 13601. PERSONAL CARE SERVICES FURNISHED OUTSIDE THE HOME AS 
OPTIONAL BENEFIT.
    (a) In General.--Section 1905(a) (42 U.S.C. 1396d(a)) is amended--
        (1) in paragraph (7), by striking ``including personal care 
    services'' and all that follows through ``nursing facility'';
        (2) by striking ``and'' at the end of paragraph (21);
        (3) in paragraph (24), by striking the comma at the end and 
    inserting a semicolon;
        (4) by redesignating paragraphs (22), (23), and (24) as 
    paragraphs (25), (22), and (23), respectively, by striking the 
    semicolon at the end of paragraph (25), as so redesignated, and 
    inserting a period, and by transferring and inserting paragraph (25) 
    after paragraph (23), as so redesignated; and
        (5) by inserting after paragraph (23), as so redesignated, the 
    following new paragraph:
        ``(24) personal care services furnished to an individual who is 
    not an inpatient or resident of a hospital, nursing facility, 
    intermediate care facility for the mentally retarded, or institution 
    for mental disease that are (A) authorized for the individual by a 
    physician in accordance with a plan of treatment or (at the option 
    of the State) otherwise authorized for the individual in accordance 
    with a service plan approved by the State, (B) provided by an 
    individual who is qualified to provide such services and who is not 
    a member of the individual's family, and (C) furnished in a home or 
    other location; and''.
    (b) Conforming Amendments.--(1) Section 1902(a)(10)(C)(iv) (42 
U.S.C. 1396a(a)(10)(C)(iv)) is amended by striking ``through (21)'' and 
inserting ``through (24)''.
    (2) Section 1902(j) (42 U.S.C. 1396a(j)) is amended by striking 
``through (22)'' and inserting ``through (25)''.
    (c) Effective Date.--The amendments made by subsections (a) and (b) 
shall take effect as if included in the enactment of section 4721(a) of 
OBRA-1990.
SEC. 13602. ADDITIONAL FEDERAL SAVINGS THROUGH MODIFICATIONS TO DRUG 
REBATE PROGRAM.
    (a) Changes in Rebate Program.--
        (1) In general.--Section 1927 (42 U.S.C. 1396r-8) is amended by 
    striking subsection (c) and all that follows through ``(2)'' in 
    subsection (f)(2) and inserting the following:
    ``(c) Determination of Amount of Rebate.--
        ``(1) Basic rebate for single source drugs and innovator 
    multiple source drugs.--
            ``(A) In general.--Except as provided in paragraph (2), the 
        amount of the rebate specified in this subsection for a rebate 
        period (as defined in subsection (k)(8)) with respect to each 
        dosage form and strength of a single source drug or an innovator 
        multiple source drug shall be equal to the product of--
                ``(i) the total number of units of each dosage form and 
            strength paid for under the State plan in the rebate period 
            (as reported by the State); and
                ``(ii) subject to subparagraph (B)(ii), the greater of--

                    ``(I) the difference between the average 
                manufacturer price and the best price (as defined in 
                subparagraph (C)) for the dosage form and strength of 
                the drug, or
                    ``(II) the minimum rebate percentage (specified in 
                subparagraph (B)(i)) of such average manufacturer price,

            for the rebate period.
            ``(B) Range of rebates required.--
                ``(i) Minimum rebate percentage.--For purposes of 
            subparagraph (A)(ii)(II), the `minimum rebate percentage' 
            for rebate periods beginning--

                    ``(I) after December 31, 1990, and before October 1, 
                1992, is 12.5 percent;
                    ``(II) after September 30, 1992, and before January 
                1, 1994, is 15.7 percent;
                    ``(III) after December 31, 1993, and before January 
                1, 1995, is 15.4 percent;
                    ``(IV) after December 31, 1994, and before January 
                1, 1996, is 15.2 percent; and
                    ``(V) after December 31, 1995, is 15.1 percent.

                ``(ii) Temporary limitation on maximum rebate amount.--
            In no case shall the amount applied under subparagraph 
            (A)(ii) for a rebate period beginning--

                    ``(I) before January 1, 1992, exceed 25 percent of 
                the average manufacturer price; or
                    ``(II) after December 31, 1991, and before January 
                1, 1993, exceed 50 percent of the average manufacturer 
                price.

            ``(C) Best price defined.--For purposes of this section--
                ``(i) In general.--The term `best price' means, with 
            respect to a single source drug or innovator multiple source 
            drug of a manufacturer, the lowest price available from the 
            manufacturer during the rebate period to any wholesaler, 
            retailer, provider, health maintenance organization, 
            nonprofit entity, or governmental entity within the United 
            States, excluding--

                    ``(I) any prices charged on or after October 1, 
                1992, to the Indian Health Service, the Department of 
                Veterans Affairs, a State home receiving funds under 
                section 1741 of title 38, United States Code, the 
                Department of Defense, the Public Health Service, or a 
                covered entity described in subsection (a)(5)(B);
                    ``(II) any prices charged under the Federal Supply 
                Schedule of the General Services Administration;
                    ``(III) any prices used under a State pharmaceutical 
                assistance program; and
                    ``(IV) any depot prices and single award contract 
                prices, as defined by the Secretary, of any agency of 
                the Federal Government.

                ``(ii) Special rules.--The term `best price'--

                    ``(I) shall be inclusive of cash discounts, free 
                goods that are contingent on any purchase requirement, 
                volume discounts, and rebates (other than rebates under 
                this section);
                    ``(II) shall be determined without regard to special 
                packaging, labeling, or identifiers on the dosage form 
                or product or package; and

                    ``(III) shall not take into account prices that are 
                merely nominal in amount.

        ``(2) Additional rebate for single source and innovator multiple 
    source drugs.--
            ``(A) In general.--The amount of the rebate specified in 
        this subsection for a rebate period, with respect to each dosage 
        form and strength of a single source drug or an innovator 
        multiple source drug, shall be increased by an amount equal to 
        the product of--
                ``(i) the total number of units of such dosage form and 
            strength dispensed after December 31, 1990, for which 
            payment was made under the State plan for the rebate period; 
            and
                ``(ii) the amount (if any) by which--

                    ``(I) the average manufacturer price for the dosage 
                form and strength of the drug for the period, exceeds
                    ``(II) the average manufacturer price for such 
                dosage form and strength for the calendar quarter 
                beginning July 1, 1990 (without regard to whether or not 
                the drug has been sold or transferred to an entity, 
                including a division or subsidiary of the manufacturer, 
                after the first day of such quarter), increased by the 
                percentage by which the consumer price index for all 
                urban consumers (United States city average) for the 
                month before the month in which the rebate period begins 
                exceeds such index for September 1990.

            ``(B) Treatment of subsequently approved drugs.--In the case 
        of a covered outpatient drug approved by the Food and Drug 
        Administration after October 1, 1990, clause (ii)(II) of 
        subparagraph (A) shall be applied by substituting `the first 
        full calendar quarter after the day on which the drug was first 
        marketed' for `the calendar quarter beginning July 1, 1990' and 
        `the month prior to the first month of the first full calendar 
        quarter after the day on which the drug was first marketed' for 
        `September 1990'.
        ``(3) Rebate for other drugs.--
            ``(A) In general.--The amount of the rebate paid to a State 
        for a rebate period with respect to each dosage form and 
        strength of covered outpatient drugs (other than single source 
        drugs and innovator multiple source drugs) shall be equal to the 
        product of--
                ``(i) the applicable percentage (as described in 
            subparagraph (B)) of the average manufacturer price for the 
            dosage form and strength for the rebate period, and
                ``(ii) the total number of units of such dosage form and 
            strength dispensed after December 31, 1990, for which 
            payment was made under the State plan for the rebate period.
            ``(B) Applicable percentage defined.--For purposes of 
        subparagraph (A)(i), the `applicable percentage' for rebate 
        periods beginning--
                ``(i) before January 1, 1994, is 10 percent, and
                ``(ii) after December 31, 1993, is 11 percent.
    ``(d) Limitations on Coverage of Drugs.--
        ``(1) Permissible restrictions.--(A) A State may subject to 
    prior authorization any covered outpatient drug. Any such prior 
    authorization program shall comply with the requirements of 
    paragraph (5).
        ``(B) A State may exclude or otherwise restrict coverage of a 
    covered outpatient drug if--
            ``(i) the prescribed use is not for a medically accepted 
        indication (as defined in subsection (k)(6));
            ``(ii) the drug is contained in the list referred to in 
        paragraph (2);
            ``(iii) the drug is subject to such restrictions pursuant to 
        an agreement between a manufacturer and a State authorized by 
        the Secretary under subsection (a)(1) or in effect pursuant to 
        subsection (a)(4); or
            ``(iv) the State has excluded coverage of the drug from its 
        formulary established in accordance with paragraph (4).
        ``(2) List of drugs subject to restriction.--The following drugs 
    or classes of drugs, or their medical uses, may be excluded from 
    coverage or otherwise restricted:
            ``(A) Agents when used for anorexia, weight loss, or weight 
        gain.
            ``(B) Agents when used to promote fertility.
            ``(C) Agents when used for cosmetic purposes or hair growth.
            ``(D) Agents when used for the symptomatic relief of cough 
        and colds.
            ``(E) Agents when used to promote smoking cessation.
            ``(F) Prescription vitamins and mineral products, except 
        prenatal vitamins and fluoride preparations.
            ``(G) Nonprescription drugs.
            ``(H) Covered outpatient drugs which the manufacturer seeks 
        to require as a condition of sale that associated tests or 
        monitoring services be purchased exclusively from the 
        manufacturer or its designee.
            ``(I) Barbiturates.
            ``(J) Benzodiazepines.
        ``(3) Update of drug listings.--The Secretary shall, by 
    regulation, periodically update the list of drugs or classes of 
    drugs described in paragraph (2) or their medical uses, which the 
    Secretary has determined, based on data collected by surveillance 
    and utilization review programs of State medical assistance 
    programs, to be subject to clinical abuse or inappropriate use.
        ``(4) Requirements for formularies.--A State may establish a 
    formulary if the formulary meets the following requirements:
            ``(A) The formulary is developed by a committee consisting 
        of physicians, pharmacists, and other appropriate individuals 
        appointed by the Governor of the State (or, at the option of the 
        State, the State's drug use review board established under 
        subsection (g)(3)).
            ``(B) Except as provided in subparagraph (C), the formulary 
        includes the covered outpatient drugs of any manufacturer which 
        has entered into and complies with an agreement under subsection 
        (a) (other than any drug excluded from coverage or otherwise 
        restricted under paragraph (2)).
            ``(C) A covered outpatient drug may be excluded with respect 
        to the treatment of a specific disease or condition for an 
        identified population (if any) only if, based on the drug's 
        labeling (or, in the case of a drug the prescribed use of which 
        is not approved under the Federal Food, Drug, and Cosmetic Act 
        but is a medically accepted indication, based on information 
        from the appropriate compendia described in subsection (k)(6)), 
        the excluded drug does not have a significant, clinically 
        meaningful therapeutic advantage in terms of safety, 
        effectiveness, or clinical outcome of such treatment for such 
        population over other drugs included in the formulary and there 
        is a written explanation (available to the public) of the basis 
        for the exclusion.
            ``(D) The State plan permits coverage of a drug excluded 
        from the formulary (other than any drug excluded from coverage 
        or otherwise restricted under paragraph (2)) pursuant to a prior 
        authorization program that is consistent with paragraph (5).
            ``(E) The formulary meets such other requirements as the 
        Secretary may impose in order to achieve program savings 
        consistent with protecting the health of program beneficiaries.
    A prior authorization program established by a State under paragraph 
    (5) is not a formulary subject to the requirements of this 
    paragraph.
        ``(5) Requirements of prior authorization programs.--A State 
    plan under this title may require, as a condition of coverage or 
    payment for a covered outpatient drug for which Federal financial 
    participation is available in accordance with this section, with 
    respect to drugs dispensed on or after July 1, 1991, the approval of 
    the drug before its dispensing for any medically accepted indication 
    (as defined in subsection (k)(6)) only if the system providing for 
    such approval--
            ``(A) provides response by telephone or other 
        telecommunication device within 24 hours of a request for prior 
        authorization; and
            ``(B) except with respect to the drugs on the list referred 
        to in paragraph (2), provides for the dispensing of at least 72-
        hour supply of a covered outpatient prescription drug in an 
        emergency situation (as defined by the Secretary).
        ``(6) Other permissible restrictions.--A State may impose 
    limitations, with respect to all such drugs in a therapeutic class, 
    on the minimum or maximum quantities per prescription or on the 
    number of refills, if such limitations are necessary to discourage 
    waste, and may address instances of fraud or abuse by individuals in 
    any manner authorized under this Act.
    ``(e) Treatment of Pharmacy Reimbursement Limits.--
        ``(1) In general.--During the period beginning on January 1, 
    1991, and ending on December 31, 1994--
            ``(A) a State may not reduce the payment limits established 
        by regulation under this title or any limitation described in 
        paragraph (3) with respect to the ingredient cost of a covered 
        outpatient drug or the dispensing fee for such a drug below the 
        limits in effect as of January 1, 1991, and
            ``(B) except as provided in paragraph (2), the Secretary may 
        not modify by regulation the formula established under sections 
        447.331 through 447.334 of title 42, Code of Federal 
        Regulations, in effect on November 5, 1990, to reduce the limits 
        described in subparagraph (A).
        ``(2) Special rule.--If a State is not in compliance with the 
    regulations described in paragraph (1)(B), paragraph (1)(A) shall 
    not apply to such State until such State is in compliance with such 
    regulations.
        ``(3) Effect on state maximum allowable cost limitations.--This 
    section shall not supersede or affect provisions in effect prior to 
    January 1, 1991, or after December 31, 1994, relating to any maximum 
    allowable cost limitation established by a State for payment by the 
    State for covered outpatient drugs, and rebates shall be made under 
    this section without regard to whether or not payment by the State 
    for such drugs is subject to such a limitation or the amount of such 
    a limitation.''.
        (2) Conforming amendments.--Section 1927 (42 U.S.C. 1396r-8) is 
    amended as follows:
            (A) In subsection (b)--
                (i) in paragraph (1)(A)--

                    (I) by striking ``each calendar quarter (or 
                periodically in accordance with a schedule specified by 
                the Secretary)'' and inserting ``for a rebate period'', 
                and

                    (II) by striking ``dispensed under the plan during 
                the quarter (or other period as the Secretary may 
                specify)'' and inserting ``dispensed after December 31, 
                1990, for which payment was made under the State plan 
                for such period'';

                (ii) in paragraph (2)(A)--

                    (I) by striking ``calendar quarter'' and ``the 
                quarter'' and inserting ``rebate period'' and ``the 
                period'', respectively,
                    (II) by striking ``dosage units'' and inserting 
                ``units of each dosage form and strength and package 
                size'', and
                    (III) by inserting ``after December 31, 1990, for 
                which payment was made'' after ``dispensed''; and

                (iii) in paragraph (3)(A)(i), by striking ``quarter'' 
            each place it appears and inserting ``rebate period under 
            the agreement''.
            (B) In subsection (k)--
                (i) in paragraph (1)--

                    (I) by striking ``calendar quarter'' and inserting 
                ``rebate period'', and
                    (II) by inserting before the period at the end the 
                following: ``, after deducting customary prompt pay 
                discounts'';

                (ii) in paragraph (3)--

                    (I) in subparagraph (E), by striking ``* * * * 
                emergency room visits'',
                    (II) in subparagraph (F), by striking ``services'' 
                and inserting ``services and services provided by an 
                intermediate care facility for the mentally retarded'', 
                and
                    (III) in the matter following subparagraph (H)--

                        (aa) by striking ``which is used'' and inserting 
                    ``for which a National Drug Code number is not 
                    required by the Food and Drug Administration or a 
                    drug or biological used''; and
                        (bb) by adding at the end the following: ``Any 
                    drug, biological product, or insulin excluded from 
                    the definition of such term as a result of this 
                    paragraph shall be treated as a covered outpatient 
                    drug for purposes of determining the best price (as 
                    defined in subsection (c)(1)(C)) for such drug, 
                    biological product, or insulin.'';
                (iii) in paragraph (6), by striking ``, which appears'' 
            and all that follows and inserting ``or the use of which is 
            supported by one or more citations included or approved for 
            inclusion in any of the compendia described in subsection 
            (g)(1)(B)(i).'';
                (iv) in paragraph (7)(A)(i), by striking ``calendar 
            quarter'' and inserting ``rebate period''; and
                (v) by redesignating paragraph (8) as paragraph (9) and 
            by inserting after paragraph (7) the following new 
            paragraph:
        ``(8) Rebate period.--The term `rebate period' means, with 
    respect to an agreement under subsection (a), a calendar quarter or 
    other period specified by the Secretary with respect to the payment 
    of rebates under such agreement.''.
    (b) Limiting Federal Payments for Certain Drugs.--Paragraph (10) of 
section 1903(i) (42 U.S.C. 1396b(i)) (as inserted by section 
4401(a)(1)(B) of OBRA-1990) is amended to read as follows:
        ``(10)(A) with respect to covered outpatient drugs unless there 
    is a rebate agreement in effect under section 1927 with respect to 
    such drugs or unless section 1927(a)(3) applies, and
        ``(B) with respect to any amount expended for an innovator 
    multiple source drug (as defined in section 1927(k)) dispensed on or 
    after July 1, 1991, if, under applicable State law, a less expensive 
    multiple source drug could have been dispensed, but only to the 
    extent that such amount exceeds the upper payment limit for such 
    multiple source drug;''.
    (c) Elimination of Prohibition Against State Use of Formularies to 
Achieve Federal Savings.--Paragraph (54) of section 1902(a) (42 U.S.C. 
1396a(a)) is amended to read as follows:
        ``(54) in the case of a State plan that provides medical 
    assistance for covered outpatient drugs (as defined in section 
    1927(k)), comply with the applicable requirements of section 
    1927;''.
    (d) Effective Dates.--(1) Except as provided in paragraph (2), the 
amendments made by this section shall take effect as if included in the 
enactment of OBRA-1990.
    (2) The amendment made by subsection (a)(1) (insofar as such 
subsection amends section 1927(d) of the Social Security Act) and the 
amendment made by subsection (c) shall apply to calendar quarters 
beginning on or after October 1, 1993, without regard to whether or not 
regulations to carry out such amendments have been promulgated by such 
date.
SEC. 13603. OPTIONAL MEDICAID COVERAGE OF TB-RELATED SERVICES FOR 
CERTAIN TB-INFECTED INDIVIDUALS.
    (a) Coverage as Optional, Categorically Needy Group.--Section 
1902(a)(10)(A)(ii) (42 U.S.C. 1396a(a)(10)(A)(ii)) is amended--
        (1) by striking ``or'' at the end of subclause (X),
        (2) by adding ``or'' at the end of subclause (XI), and
        (3) by adding at the end the following new subclause:

                    ``(XII) who are described in subsection (z)(1) 
                (relating to certain TB-infected individuals);''.

    (b) Group and Benefit Described.--Section 1902 is amended by adding 
at the end the following new subsection:
    ``(z)(1) Individuals described in this paragraph are individuals not 
described in subsection (a)(10)(A)(i)--
        ``(A) who are infected with tuberculosis;
        ``(B) whose income (as determined under the State plan under 
    this title with respect to disabled individuals) does not exceed the 
    maximum amount of income a disabled individual described in 
    subsection (a)(10)(A)(i) may have and obtain medical assistance 
    under the plan; and
        ``(C) whose resources (as determined under the State plan under 
    this title with respect to disabled individuals) do not exceed the 
    maximum amount of resources a disabled individual described in 
    subsection (a)(10)(A)(i) may have and obtain medical assistance 
    under the plan.
    ``(2) For purposes of subsection (a)(10), the term `TB-related 
services' means each of the following services relating to treatment of 
infection with tuberculosis:
        ``(A) Prescribed drugs.
        ``(B) Physicians' services and services described in section 
    1905(a)(2).
        ``(C) Laboratory and X-ray services (including services to 
    confirm the presence of infection).
        ``(D) Clinic services and Federally-qualified health center 
    services.
        ``(E) Case management services (as defined in section 
    1915(g)(2)).
        ``(F) Services (other than room and board) designed to encourage 
    completion of regimens of prescribed drugs by outpatients, including 
    services to observe directly the intake of prescribed drugs.''.
    (c) Limitation on Benefits.--Section 1902(a)(10) (42 U.S.C. 
1396a(a)(10)) is amended in the matter following subparagraph (F)--
        (1) by striking ``; and (XI)'' and inserting ``, (XI)'',
        (2) by striking ``individuals, and (XI)'' and inserting 
    ``individuals, (XII)'', and
        (3) by inserting before the semicolon at the end the following: 
    ``, and (XIII) the medical assistance made available to an 
    individual described in subsection (z)(1) who is eligible for 
    medical assistance only because of subparagraph (A)(ii)(XII) shall 
    be limited to medical assistance for TB-related services (described 
    in subsection (z)(2))''.
    (d) Conforming Expansion of Case Management Services Option.--
Section 1915(g)(1) (42 U.S.C. 1396n(g)(1)) is amended by inserting ``or 
to individuals described in section 1902(z)(1)(A)'' after ``or with 
either,''.
    (e) Conforming Amendment.--Section 1905(a) (42 U.S.C. 1396d(a)) is 
amended--
        (1) by striking ``or'' at the end of clause (ix),
        (2) by adding ``or'' at the end of clause (x),
        (3) by inserting after clause (x) the following new clause:
        ``(xi) individuals described in section 1902(z)(1),'', and
        (4) by amending paragraph (19) to read as follows:
        ``(19) case management services (as defined in section 
    1915(g)(2)) and TB-related services described in section 
    1902(z)(2)(F);''.
    (f) Effective Date.--The amendments made by this section shall apply 
to medical assistance furnished on or after January 1, 1994, without 
regard to whether or not final regulations to carry out such amendments 
have been promulgated by such date.
SEC. 13604. LIMITING FEDERAL MEDICAID MATCHING PAYMENT TO BONA FIDE 
EMERGENCY SERVICES FOR UNDOCUMENTED ALIENS.
    (a) In General.--Section 1903(v)(2) (42 U.S.C. 1396b(v)(2)) is 
amended--
        (1) by striking ``and'' at the end of subparagraph (A),
        (2) by striking the period at the end of subparagraph (B) and 
    inserting ``, and'', and
        (3) by adding at the end the following new subparagraph:
        ``(C) such care and services are not related to an organ 
    transplant procedure.''.
    (b) Effective Dates.--(1) Subject to paragraph (2), the amendments 
made by subsection (a) shall apply as if included in the enactment of 
OBRA-1986.
    (2) The Secretary of Health and Human Services shall not disallow 
expenditures made for the care and services described in section 
1903(v)(2)(C) of the Social Security Act, as added by subsection (a), 
furnished before the date of the enactment of this Act.
SEC. 13605. COVERAGE OF NURSE-MIDWIFE SERVICES PERFORMED OUTSIDE THE 
MATERNITY CYCLE.
    (a) In General.--Section 1905(a)(17) (42 U.S.C. 1396d(a)(17)) is 
amended by inserting before the semicolon at the end the following: ``, 
and without regard to whether or not the services are performed in the 
area of management of the care of mothers and babies throughout the 
maternity cycle''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to services furnished on or after October 1, 1993.
SEC. 13606. TREATMENT OF CERTAIN CLINICS AS FEDERALLY-QUALIFIED HEALTH 
CENTERS.
    (a) In General.--Section 1905(l)(2)(B) (42 U.S.C. 1396d(l)(2)(B)) is 
amended--
        (1) by striking ``or'' at the end of clause (i),
        (2) by striking the semicolon at the end of clause (ii)(II) and 
    inserting a comma,
        (3) by moving clause (ii) 4 ems to the left,
        (4) by adding ``or'' at the end of clause (iii), and
        (5) by inserting after clause (iii) the following new clause:
        ``(iv) was treated by the Secretary, for purposes of part B of 
    title XVIII, as a comprehensive Federally funded health center as of 
    January 1, 1990;''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to calendar quarters beginning on or after July 1, 1993.

                          PART II--ELIGIBILITY

SEC. 13611. TRANSFERS OF ASSETS; TREATMENT OF CERTAIN TRUSTS.
    (a) Periods of Ineligibility for Transfers of Assets.--
        (1) In general.--Section 1917(c)(1) (42 U.S.C. 1396p(c)(1)) is 
    amended to read as follows:
    ``(1)(A) In order to meet the requirements of this subsection for 
purposes of section 1902(a)(18), the State plan must provide that if an 
institutionalized individual or the spouse of such an individual (or, at 
the option of a State, a noninstitutionalized individual or the spouse 
of such an individual) disposes of assets for less than fair market 
value on or after the look-back date specified in subparagraph (B)(i), 
the individual is ineligible for medical assistance for services 
described in subparagraph (C)(i) (or, in the case of a 
noninstitutionalized individual, for the services described in 
subparagraph (C)(ii)) during the period beginning on the date specified 
in subparagraph (D) and equal to the number of months specified in 
subparagraph (E).
    ``(B)(i) The look-back date specified in this subparagraph is a date 
that is 36 months (or, in the case of payments from a trust or portions 
of a trust that are treated as assets disposed of by the individual 
pursuant to paragraph (3)(A)(iii) or (3)(B)(ii) of subsection (d), 60 
months) before the date specified in clause (ii).
    ``(ii) The date specified in this clause, with respect to--
        ``(I) an institutionalized individual is the first date as of 
    which the individual both is an institutionalized individual and has 
    applied for medical assistance under the State plan, or
        ``(II) a noninstitutionalized individual is the date on which 
    the individual applies for medical assistance under the State plan 
    or, if later, the date on which the individual disposes of assets 
    for less than fair market value.
    ``(C)(i) The services described in this subparagraph with respect to 
an institutionalized individual are the following:
        ``(I) Nursing facility services.
        ``(II) A level of care in any institution equivalent to that of 
    nursing facility services.
        ``(III) Home or community-based services furnished under a 
    waiver granted under subsection (c) or (d) of section 1915.
    ``(ii) The services described in this subparagraph with respect to a 
noninstitutionalized individual are services (not including any services 
described in clause (i)) that are described in paragraph (7), (22), or 
(24) of section 1905(a), and, at the option of a State, other long-term 
care services for which medical assistance is otherwise available under 
the State plan to individuals requiring long-term care.
    ``(D) The date specified in this subparagraph is the first day of 
the first month during or after which assets have been transferred for 
less than fair market value and which does not occur in any other 
periods of ineligibility under this subsection.
    ``(E)(i) With respect to an institutionalized individual, the number 
of months of ineligibility under this subparagraph for an individual 
shall be equal to--
        ``(I) the total, cumulative uncompensated value of all assets 
    transferred by the individual (or individual's spouse) on or after 
    the look-back date specified in subparagraph (B)(i), divided by
        ``(II) the average monthly cost to a private patient of nursing 
    facility services in the State (or, at the option of the State, in 
    the community in which the individual is institutionalized) at the 
    time of application.
    ``(ii) With respect to a noninstitutionalized individual, the number 
of months of ineligibility under this subparagraph for an individual 
shall not be greater than a number equal to--
        ``(I) the total, cumulative uncompensated value of all assets 
    transferred by the individual (or individual's spouse) on or after 
    the look-back date specified in subparagraph (B)(i), divided by
        ``(II) the average monthly cost to a private patient of nursing 
    facility services in the State (or, at the option of the State, in 
    the community in which the individual is institutionalized) at the 
    time of application.
    ``(iii) The number of months of ineligibility otherwise determined 
under clause (i) or (ii) with respect to the disposal of an asset shall 
be reduced--
        ``(I) in the case of periods of ineligibility determined under 
    clause (i), by the number of months of ineligibility applicable to 
    the individual under clause (ii) as a result of such disposal, and
        ``(II) in the case of periods of ineligibility determined under 
    clause (ii), by the number of months of ineligibility applicable to 
    the individual under clause (i) as a result of such disposal.
        (2) Exceptions.--Section 1917(c) is amended--
            (A) in paragraph (2)(A), by striking ``resources'' and 
        inserting ``assets'';
            (B) by amending paragraph (2)(B) to read as follows:
        ``(B) the assets--
            ``(i) were transferred to the individual's spouse or to 
        another for the sole benefit of the individual's spouse,
            ``(ii) were transferred from the individual's spouse to 
        another for the sole benefit of the individual's spouse,
            ``(iii) were transferred to, or to a trust (including a 
        trust described in subsection (d)(4)) established solely for the 
        benefit of, the individual's child described in subparagraph 
        (A)(ii)(II), or
            ``(iv) were transferred to a trust (including a trust 
        described in subsection (d)(4)) established solely for the 
        benefit of an individual under 65 years of age who is disabled 
        (as defined in section 1614(a)(3));'';
            (C) in paragraph (2)(C)--
                (i) by striking ``resources'' each place it appears and 
            inserting ``assets'',
                (ii) by striking ``any'',
                (iii) by striking ``or (ii)'' and inserting ``(ii)'', 
            and
                (iv) by striking ``; or'' and inserting ``, or (iii) all 
            assets transferred for less than fair market value have been 
            returned to the individual; or'';
            (D) by amending paragraph (2)(D) to read as follows:
        ``(D) the State determines, under procedures established by the 
    State (in accordance with standards specified by the Secretary), 
    that the denial of eligibility would work an undue hardship as 
    determined on the basis of criteria established by the Secretary;'';
            (E) by striking paragraph (3) and inserting the following:
    ``(3) For purposes of this subsection, in the case of an asset held 
by an individual in common with another person or persons in a joint 
tenancy, tenancy in common, or similar arrangement, the asset (or the 
affected portion of such asset) shall be considered to be transferred by 
such individual when any action is taken, either by such individual or 
by any other person, that reduces or eliminates such individual's 
ownership or control of such asset.''; and
            (F) by adding at the end of paragraph (4) the following: 
        ``In the case of a transfer by the spouse of an individual which 
        results in a period of ineligibility for medical assistance 
        under a State plan for such individual, a State shall, using a 
        reasonable methodology (as specified by the Secretary), 
        apportion such period of ineligibility (or any portion of such 
        period) among the individual and the individual's spouse if the 
        spouse otherwise becomes eligible for medical assistance under 
        the State plan.''.
    (b) Treatment of Trust Amounts.--Section 1917 (42 U.S.C. 1396p) is 
amended by adding at the end the following:
    ``(d)(1) For purposes of determining an individual's eligibility 
for, or amount of, benefits under a State plan under this title, subject 
to paragraph (4), the rules specified in paragraph (3) shall apply to a 
trust established by such individual.
    ``(2)(A) For purposes of this subsection, an individual shall be 
considered to have established a trust if assets of the individual were 
used to form all or part of the corpus of the trust and if any of the 
following individuals established such trust other than by will:
        ``(i) The individual.
        ``(ii) The individual's spouse.
        ``(iii) A person, including a court or administrative body, with 
    legal authority to act in place of or on behalf of the individual or 
    the individual's spouse.
        ``(iv) A person, including any court or administrative body, 
    acting at the direction or upon the request of the individual or the 
    individual's spouse.
    ``(B) In the case of a trust the corpus of which includes assets of 
an individual (as determined under subparagraph (A)) and assets of any 
other person or persons, the provisions of this subsection shall apply 
to the portion of the trust attributable to the assets of the 
individual.
    ``(C) Subject to paragraph (4), this subsection shall apply without 
regard to--
        ``(i) the purposes for which a trust is established,
        ``(ii) whether the trustees have or exercise any discretion 
    under the trust,
        ``(iii) any restrictions on when or whether distributions may be 
    made from the trust, or
        ``(iv) any restrictions on the use of distributions from the 
    trust.
    ``(3)(A) In the case of a revocable trust--
        ``(i) the corpus of the trust shall be considered resources 
    available to the individual,
        ``(ii) payments from the trust to or for the benefit of the 
    individual shall be considered income of the individual, and
        ``(iii) any other payments from the trust shall be considered 
    assets disposed of by the individual for purposes of subPsection 
    (c).
    ``(B) In the case of an irrevocable trust--
        ``(i) if there are any circumstances under which payment from 
    the trust could be made to or for the benefit of the individual, the 
    portion of the corpus from which, or the income on the corpus from 
    which, payment to the individual could be made shall be considered 
    resources available to the individual, and payments from that 
    portion of the corpus or income--
            ``(I) to or for the benefit of the individual, shall be 
        considered income of the individual, and
            ``(II) for any other purpose, shall be considered a transfer 
        of assets by the individual subject to subsection (c); and
        ``(ii) any portion of the trust from which, or any income on the 
    corpus from which, no payment could under any circumstances be made 
    to the individual shall be considered, as of the date of 
    establishment of the trust (or, if later, the date on which payment 
    to the individual was foreclosed) to be assets disposed by the 
    individual for purposes of subsection (c), and the value of the 
    trust shall be determined for purposes of such subsection by 
    including the amount of any payments made from such portion of the 
    trust after such date.
    ``(4) This subsection shall not apply to any of the following 
trusts:
        ``(A) A trust containing the assets of an individual under age 
    65 who is disabled (as defined in section 1614(a)(3)) and which is 
    established for the benefit of such individual by a parent, 
    grandparent, legal guardian of the individual, or a court if the 
    State will receive all amounts remaining in the trust upon the death 
    of such individual up to an amount equal to the total medical 
    assistance paid on behalf of the individual under a State plan under 
    this title.
        ``(B) A trust established in a State for the benefit of an 
    individual if--
            ``(i) the trust is composed only of pension, Social 
        Security, and other income to the individual (and accumulated 
        income in the trust),
            ``(ii) the State will receive all amounts remaining in the 
        trust upon the death of such individual up to an amount equal to 
        the total medical assistance paid on behalf of the individual 
        under a State plan under this title, and
            ``(iii) the State makes medical assistance available to 
        individuals described in section 1902(a)(10)(A)(ii)(V), but does 
        not make such assistance available to individuals for nursing 
        facility services under section 1902(a)(10)(C).
        ``(C) A trust containing the assets of an individual who is 
    disabled (as defined in section 1614(a)(3)) that meets the following 
    conditions:
            ``(i) The trust is established and managed by a non-profit 
        association.
            ``(ii) A separate account is maintained for each beneficiary 
        of the trust, but, for purposes of investment and management of 
        funds, the trust pools these accounts.
            ``(iii) Accounts in the trust are established solely for the 
        benefit of individuals who are disabled (as defined in section 
        1614(a)(3)) by the parent, grandparent, or legal guardian of 
        such individuals, by such individuals, or by a court.
            ``(iv) To the extent that amounts remaining in the 
        beneficiary's account upon the death of the beneficiary are not 
        retained by the trust, the trust pays to the State from such 
        remaining amounts in the account an amount equal to the total 
        amount of medical assistance paid on behalf of the beneficiary 
        under the State plan under this title.
    ``(5) The State agency shall establish procedures (in accordance 
with standards specified by the Secretary) under which the agency waives 
the application of this subsection with respect to an individual if the 
individual establishes that such application would work an undue 
hardship on the individual as determined on the basis of criteria 
established by the Secretary.''.
    ``(6) The term `trust' includes any legal instrument or device that 
is similar to a trust but includes an annuity only to such extent and in 
such manner as the Secretary specifies.''.
    (c) Definitions.--Section 1917 (42 U.S.C. 1396p), as amended by 
subsection (b), is further amended by adding at the end the following 
new subsection:
    ``(e) In this section, the following definitions shall apply:
        ``(1) The term `assets', with respect to an individual, includes 
    all income and resources of the individual and of the individual's 
    spouse, including any income or resources which the individual or 
    such individual's spouse is entitled to but does not receive because 
    of action--
            ``(A) by the individual or such individual's spouse,
            ``(B) by a person, including a court or administrative body, 
        with legal authority to act in place of or on behalf of the 
        individual or such individual's spouse, or
            ``(C) by any person, including any court or administrative 
        body, acting at the direction or upon the request of the 
        individual or such individual's spouse.
        ``(2) The term `income' has the meaning given such term in 
    section 1612.
        ``(3) The term `institutionalized individual' means an 
    individual who is an inpatient in a nursing facility, who is an 
    inpatient in a medical institution and with respect to whom payment 
    is made based on a level of care provided in a nursing facility, or 
    who is described in section 1902(a)(10)(A)(ii)(VI).
        ``(4) The term `noninstitutionalized individual' means an 
    individual receiving any of the services specified in subsection 
    (c)(1)(C)(ii).
        ``(5) The term `resources' has the meaning given such term in 
    section 1613, without regard (in the case of an institutionalized 
    individual) to the exclusion described in subsection (a)(1) of such 
    section.''.
    (d) Conforming Amendments.--
        (1) Section 1902 (42 U.S.C. 1396a) is amended--
            (A) in subsection (a)(18), by striking ``and transfers of 
        assets'' and inserting ``, transfers of assets, and treatment of 
        certain trusts'';
            (B) in subsection (a)(51)--
                (i) by striking ``(A)''; and
                (ii) by striking ``, and (B)'' and all that follows and 
            inserting a semicolon; and
            (C) by striking subsection (k).
        (2) Section 1924(b)(2)(B)(i) (42 U.S.C. 1396r-5(b)(2)(B)(i)) is 
    amended by striking ``1902(k)'' and inserting ``1917(d)''.
    (e) Effective Dates.--(1) The amendments made by this section shall 
apply, except as provided in this subsection, to payments under title 
XIX of the Social Security Act for calendar quarters beginning on or 
after October 1, 1993, without regard to whether or not final 
regulations to carry out such amendments have been promulgated by such 
date.
    (2) The amendments made by this section shall not apply--
        (A) to medical assistance provided for services furnished before 
    October 1, 1993,
        (B) with respect to assets disposed of on or before the date of 
    the enactment of this Act, or
        (C) with respect to trusts established on or before the date of 
    the enactment of this Act.
    (3) In the case of a State plan for medical assistance under title 
XIX of the Social Security Act which the Secretary of Health and Human 
Services determines requires State legislation (other than legislation 
appropriating funds) in order for the plan to meet the additional 
requirements imposed by the amendment made by subsection (b), the State 
plan shall not be regarded as failing to comply with the requirements 
imposed by such amendment solely on the basis of its failure to meet 
these additional requirements before the first day of the first calendar 
quarter beginning after the close of the first regular session of the 
State legislature that begins after the date of the enactment of this 
Act. For purposes of the preceding sentence, in the case of a State that 
has a 2-year legislative session, each year of such session shall be 
deemed to be a separate regular session of the State legislature.

SEC. 13612. MEDICAID ESTATE RECOVERIES.

    (a) Mandate To Seek Recovery.--Section 1917(b)(1) (42 U.S.C. 
1396p(b)(1)) is amended by striking ``except--'' and all that follows 
and inserting the following: ``except that the State shall seek 
adjustment or recovery of any medical assistance correctly paid on 
behalf of an individual under the State plan in the case of the 
following individuals:
        ``(A) In the case of an individual described in subsection 
    (a)(1)(B), the State shall seek adjustment or recovery from the 
    individual's estate or upon sale of the property subject to a lien 
    imposed on account of medical assistance paid on behalf of the 
    individual.
        ``(B) In the case of an individual who was 55 years of age or 
    older when the individual received such medical assistance, the 
    State shall seek adjustment or recovery from the individual's 
    estate, but only for medical assistance consisting of--
            ``(i) nursing facility services, home and community-based 
        services, and related hospital and prescription drug services, 
        or
            ``(ii) at the option of the State, any items or services 
        under the State plan.
        ``(C)(i) In the case of an individual who has received (or is 
    entitled to receive) benefits under a long-term care insurance 
    policy in connection with which assets or resources are disregarded 
    in the manner described in clause (ii), except as provided in such 
    clause, the State shall seek adjustment or recovery from the 
    individual's estate on account of medical assistance paid on behalf 
    of the individual for nursing facility and other long-term care 
    services.
        ``(ii) Clause (i) shall not apply in the case of an individual 
    who received medical assistance under a State plan of a State which 
    had a State plan amendment approved as of May 14, 1993, which 
    provided for the disregard of any assets or resources--
            ``(I) to the extent that payments are made under a long-term 
        care insurance policy; or
            ``(II) because an individual has received (or is entitled to 
        receive) benefits under a long-term care insurance policy.''.
    (b) Hardship Waiver.--Section 1917(b) (42 U.S.C. 1396p(b)) is 
amended by adding at the end the following new paragraph:
    ``(3) The State agency shall establish procedures (in accordance 
with standards specified by the Secretary) under which the agency shall 
waive the application of this subsection (other than paragraph (1)(C)) 
if such application would work an undue hardship as determined on the 
basis of criteria established by the Secretary.''.
    (c) Definition of Estate.--Section 1917(b) (42 U.S.C. 1396p(b)), as 
amended by subsection (b), is amended by adding at the end the following 
new paragraph:
    ``(4) For purposes of this subsection, the term `estate', with 
respect to a deceased individual--
        ``(A) shall include all real and personal property and other 
    assets included within the individual's estate, as defined for 
    purposes of State probate law; and
        ``(B) may include, at the option of the State (and shall 
    include, in the case of an individual to whom paragraph (1)(C)(i) 
    applies), any other real and personal property and other assets in 
    which the individual had any legal title or interest at the time of 
    death (to the extent of such interest), including such assets 
    conveyed to a survivor, heir, or assign of the deceased individual 
    through joint tenancy, tenancy in common, survivorship, life estate, 
    living trust, or other arrangement.''.
    (d) Effective Dates.--(1)(A) Except as provided in subparagraph (B), 
the amendments made by this section shall apply to payments under title 
XIX of the Social Security Act for calendar quarters beginning on or 
after October 1, 1993, without regard to whether or not final 
regulations to carry out such amendments have been promulgated by such 
date.
    (B) In the case of a State plan for medical assistance under title 
XIX of the Social Security Act which the Secretary of Health and Human 
Services determines requires State legislation (other than legislation 
appropriating funds) in order for the plan to meet the additional 
requirements imposed by the amendments made by this section, the State 
plan shall not be regarded as failing to comply with the requirements 
imposed by such amendments solely on the basis of its failure to meet 
these additional requirements before the first day of the first calendar 
quarter beginning after the close of the first regular session of the 
State legislature that begins after the date of the enactment of this 
Act. For purposes of the preceding sentence, in the case of a State that 
has a 2-year legislative session, each year of such session shall be 
deemed to be a separate regular session of the State legislature.
    (2) The amendments made by this section shall not apply to 
individuals who died before October 1, 1993.

                           PART III--PAYMENTS

SEC. 13621. ASSURING PROPER PAYMENTS TO DISPROPORTIONATE SHARE 
HOSPITALS.
    (a) Disproportionate Share Hospitals Required to Provide Minimum 
Level of Services to Medicaid Patients.--
        (1) In general.--Section 1923 (42 U.S.C. 1396r-4) is amended--
            (A) in subsection (a)(1)(A), by striking ``requirement'' and 
        inserting ``requirements'';
            (B) in subsection (b)(1), by striking ``requirement'' and 
        inserting ``requirements'';
            (C) in the heading to subsection (d), by striking 
        ``Requirement'' and inserting ``Requirements'';
            (D) by adding at the end of subsection (d) the following new 
        paragraph:
        ``(3) No hospital may be defined or deemed as a disproportionate 
    share hospital under a State plan under this title or under 
    subsection (b) or (e) of this section unless the hospital has a 
    medicaid inpatient utilization rate (as defined in subsection 
    (b)(2)) of not less than 1 percent.'';
            (E) in subsection (e)(1)--
                (i) by striking ``and'' before ``(B)'', and
                (ii) by inserting before the period at the end the 
            following: ``, and (C) the plan meets the requirement of 
            subsection (d)(3) and such payment adjustments are made 
            consistent with the last sentence of subsection (c)''; and
            (F) in subsection (e)(2)--
                (i) in subparagraph (A), by inserting ``(other than the 
            last sentence of subsection (c))'' after ``(c)'',
                (ii) by striking ``and'' at the end of subparagraph (A),
                (iii) by striking the period at the end of subparagraph 
            (B) and inserting ``, and'', and
                (iv) by adding at the end the following new 
            subparagraph:
        ``(C) subsection (d)(3) shall apply.''.
        (2) Effective date.--The amendments made by this subsection 
    shall apply to payments to States under section 1903(a) of the 
    Social Security Act for payments to hospitals made under State plans 
    after--
            (A) the end of the State fiscal year that ends during 1994, 
        or
            (B) in the case of a State with a State legislature which is 
        not scheduled to have a regular legislative session in 1994, the 
        end of the State fiscal year that ends during 1995;
    without regard to whether or not final regulations to carry out such 
    amendments have been promulgated by either such date.
    (b) Limiting Amount of Hospital Payment Adjustment to Uncovered 
Costs.--
        (1) In general.--Section 1923 (42 U.S.C. 1396r-4) is amended by 
    adding at the end the following new subsection:
    ``(g) Limit on Amount of Payment to Hospital.--
        ``(1) Amount of adjustment subject to uncompensated costs.--
            ``(A) In general.--A payment adjustment during a fiscal year 
        shall not be considered to be consistent with subsection (c) 
        with respect to a hospital if the payment adjustment exceeds the 
        costs incurred during the year of furnishing hospital services 
        (as determined by the Secretary and net of payments under this 
        title, other than under this section, and by uninsured patients) 
        by the hospital to individuals who either are eligible for 
        medical assistance under the State plan or have no health 
        insurance (or other source of third party coverage) for services 
        provided during the year. For purposes of the preceding 
        sentence, payments made to a hospital for services provided to 
        indigent patients made by a State or a unit of local government 
        within a State shall not be considered to be a source of third 
        party payment.
            ``(B) Limit to public hospitals during transition period.--
        With respect to payment adjustments during a State fiscal year 
        that begins before January 1, 1995, subparagraph (A) shall apply 
        only to hospitals owned or operated by a State (or by an 
        instrumentality or a unit of government within a State).
            ``(C) Modifications for private hospitals.--With respect to 
        hospitals that are not owned or operated by a State (or by an 
        instrumentality or a unit of government within a State), the 
        Secretary may make such modifications to the manner in which the 
        limitation on payment adjustments is applied to such hospitals 
        as the Secretary considers appropriate.
        ``(2) Additional amount during transition period for certain 
    hospitals with high disproportionate share.--
            ``(A) In general.--In the case of a hospital with high 
        disproportionate share (as defined in subparagraph (B)), a 
        payment adjustment during a State fiscal year that begins before 
        January 1, 1995, shall be considered consistent with subsection 
        (c) if the payment adjustment does not exceed 200 percent of the 
        costs of furnishing hospital services described in paragraph 
        (1)(A) during the year, but only if the Governor of the State 
        certifies to the satisfaction of the Secretary that the 
        hospital's applicable minimum amount is used for health services 
        during the year. In determining the amount that is used for such 
        services during a year, there shall be excluded any amounts 
        received under the Public Health Service Act, title V, title 
        XVIII, or from third party payors (not including the State plan 
        under this title) that are used for providing such services 
        during the year.
            ``(B) Hospitals with high disproportionate share defined.--
        In subparagraph (A), a hospital is a `hospital with high 
        disproportionate share' if--
                ``(i) the hospital is owned or operated by a State (or 
            by an instrumentality or a unit of government within a 
            State); and
                ``(ii) the hospital--

                    ``(I) meets the requirement described in subsection 
                (b)(1)(A), or
                    ``(II) has the largest number of inpatient days 
                attributable to individuals entitled to benefits under 
                the State plan of any hospital in such State for the 
                previous State fiscal year.

            ``(C) Applicable minimum amount defined.--In subparagraph 
        (A), the `applicable minimum amount' for a hospital for a fiscal 
        year is equal to the difference between the amount of the 
        hospital's payment adjustment for the fiscal year and the costs 
        to the hospital of furnishing hospital services described in 
        paragraph (1)(A) during the fiscal year.''.
        (2) Conforming amendments.--Section 1923 is amended--
            (A) in subsection (c) in the matter preceding paragraph (1), 
        by striking ``subsection (f)'' and inserting ``subsections (f) 
        and (g)''; and
            (B) in subsection (e)(2) (as amended by subsection 
        (a)(1)(F))--
                (i) by striking ``and'' at the end of subparagraph (B);
                (ii) by striking the period at the end of subparagraph 
            (C) and inserting ``, and''; and
                (iii) by adding at the end the following new 
            subparagraph:
        ``(D) subsection (g) shall apply.''.
        (3) Effective date.--
            (A) In general.--Except as provided in subparagraph (B), the 
        amendments made by this subsection shall apply to payments to 
        States under section 1903(a) of the Social Security Act for 
        payments to hospitals made under State plans after--
                (i) the end of the State fiscal year that ends during 
            1994, or
                (ii) in the case of a State with a State legislature 
            which is not scheduled to have a regular legislative session 
            in 1994, the end of the State fiscal year that ends during 
            1995;
        without regard to whether or not final regulations to carry out 
        such amendments have been promulgated by either such date.
            (B) Delay in implementation for private hospitals.--With 
        respect to a hospital that is not owned or operated by a State 
        (or by an instrumentality or a unit of government within a 
        State), the amendments made by this subsection shall apply to 
        payments to States under section 1903(a) for payments to 
        hospitals made under State plans for State fiscal years that 
        begin during or after 1995, without regard to whether or not 
        final regulations to carry out such amendments have been 
        promulgated by such date.
SEC. 13622. LIABILITY OF THIRD PARTIES TO PAY FOR CARE AND SERVICES.
    (a) Liability of ERISA Plans.--(1) Section 1902(a)(25)(A) (42 U.S.C. 
1396a(a)(25)(A)) is amended by striking ``insurers)'' and inserting 
``insurers, group health plans (as defined in section 607(1) of the 
Employee Retirement Income Security Act of 1974), service benefit plans, 
and health maintenance organizations)''.
    (2) Section 1903(o) (42 U.S.C. 1396b(o)) is amended by striking 
``regulation)'' and inserting ``regulation and including a group health 
plan (as defined in section 607(1) of the Employee Retirement Income 
Security Act of 1974)), a service benefit plan, and a health maintenance 
organization)''.
    (b) Requiring State To Prohibit Insurers From Taking Medicaid Status 
Into Account.--Section 1902(a)(25) (42 U.S.C. 1396a(a)(25)) is amended--
        (1) by striking ``and'' at the end of subparagraph (F);
        (2) by adding ``and'' at the end of subparagraph (G); and
        (3) by adding after subparagraph (G) the following new 
    subparagraph:
            ``(H) that the State prohibits any health insurer (including 
        a group health plan, as defined in section 607(1) of the 
        Employee Retirement Income Security Act of 1974, a service 
        benefit plan, and a health maintenance organization), in 
        enrolling an individual or in making any payments for benefits 
        to the individual or on the individual's behalf, from taking 
        into account that the individual is eligible for or is provided 
        medical assistance under a plan under this title for such State, 
        or any other State;''.
    (c) State Right to Third Party Payments.--Section 1902(a)(25) (42 
U.S.C. 1396a(a)(25)), as amended by subsection (b), is amended--
        (1) by striking ``and'' at the end of subparagraph (G);
        (2) by adding ``and'' at the end of subparagraph (H); and
        (3) by adding after subparagraph (H) the following new 
    subparagraph:
            ``(I) that to the extent that payment has been made under 
        the State plan for medical assistance in any case where a third 
        party has a legal liability to make payment for such assistance, 
        the State has in effect laws under which, to the extent that 
        payment has been made under the State plan for medical 
        assistance for health care items or services furnished to an 
        individual, the State is considered to have acquired the rights 
        of such individual to payment by any other party for such health 
        care items or services;''.
    (d) Effective Date.--(1) Except as provided in paragraph (2), the 
amendments made by subsections (a)(1), (b), and (c) shall apply to 
calendar quarters beginning on or after October 1, 1993, without regard 
to whether or not final regulations to carry out such amendments have 
been promulgated by such date.
    (2) In the case of a State plan for medical assistance under title 
XIX of the Social Security Act which the Secretary of Health and Human 
Services determines requires State legislation (other than legislation 
appropriating funds) in order for the plan to meet the additional 
requirements imposed by the amendments made by subsections (a) and (b), 
the State plan shall not be regarded as failing to comply with the 
requirements of such title solely on the basis of its failure to meet 
these additional requirements before the first day of the first calendar 
quarter beginning after the close of the first regular session of the 
State legislature that begins after the date of the enactment of this 
Act. For purposes of the preceding sentence, in the case of a State that 
has a 2-year legislative session, each year of such session shall be 
deemed to be a separate regular session of the State legislature.
    (3) The amendment made by subsection (a)(2) shall apply to items and 
services furnished on or after October 1, 1993.

SEC. 13623. MEDICAL CHILD SUPPORT.

    (a) State Plan Requirement.--Section 1902(a) (42 U.S.C. 1396a(a)) is 
amended--
        (1) by striking ``and'' at the end of paragraph (54);
        (2) in the paragraph (55) inserted by section 4602(a)(3) of 
    OBRA-1990, by striking the period at the end and inserting a 
    semicolon;
        (3) by redesignating the paragraph (55) inserted by section 
    4604(b)(3) of OBRA-1990 as paragraph (56), by transferring and 
    inserting it after the paragraph (55) inserted by section 4602(a)(3) 
    of such Act, and by striking the period at the end and inserting a 
    semicolon;
        (4) by placing paragraphs (57) and (58), inserted by section 
    4751(a)(1)(C) of OBRA-1990, immediately after paragraph (56), as 
    redesignated by paragraph (3);
        (5) in the paragraph (58) inserted by section 4751(a)(1)(C) of 
    OBRA-1990, by striking the period at the end and inserting a 
    semicolon;
        (6) by redesignating the paragraph (58) inserted by section 
    4752(c)(1)(C) of OBRA-1990 as paragraph (59) and by transferring and 
    inserting it after the paragraph (58) inserted by section 
    4751(a)(1)(C) of such Act, and by striking the period at the end and 
    inserting ``; and''; and
        (7) by inserting after paragraph (59) the following new 
    paragraph:
        ``(60) provide that the State agency shall provide assurances 
    satisfactory to the Secretary that the State has in effect the laws 
    relating to medical child support required under section 1908.''.
    (b) Medical Child Support Laws.--Title XIX (42 U.S.C 1936 et seq.) 
is amended by inserting after section 1907 the following new section:


             ``REQUIRED LAWS RELATING TO MEDICAL CHILD SUPPORT

    ``Sec. 1908. (a) In General.--The laws relating to medical child 
support, which a State is required to have in effect under section 
1902(a)(60), are as follows:
        ``(1) A law that prohibits an insurer from denying enrollment of 
    a child under the health coverage of the child's parent on the 
    ground that--
            ``(A) the child was born out of wedlock,
            ``(B) the child is not claimed as a dependent on the 
        parent's Federal income tax return, or
            ``(C) the child does not reside with the parent or in the 
        insurer's service area.
        ``(2) In any case in which a parent is required by a court or 
    administrative order to provide health coverage for a child and the 
    parent is eligible for family health coverage through an insurer, a 
    law that requires such insurer--
            ``(A) to permit such parent to enroll under such family 
        coverage any such child who is otherwise eligible for such 
        coverage (without regard to any enrollment season restrictions);
            ``(B) if such a parent is enrolled but fails to make 
        application to obtain coverage of such child, to enroll such 
        child under such family coverage upon application by the child's 
        other parent or by the State agency administering the program 
        under this title or part D of title IV; and
            ``(C) not to disenroll (or eliminate coverage of) such a 
        child unless the insurer is provided satisfactory written 
        evidence that--
                ``(i) such court or administrative order is no longer in 
            effect, or
                ``(ii) the child is or will be enrolled in comparable 
            health coverage through another insurer which will take 
            effect not later than the effective date of such 
            disenrollment.
        ``(3) In any case in which a parent is required by a court or 
    administrative order to provide health coverage for a child and the 
    parent is eligible for family health coverage through an employer 
    doing business in the State, a law that requires such employer--
            ``(A) to permit such parent to enroll under such family 
        coverage any such child who is otherwise eligible for such 
        coverage (without regard to any enrollment season restrictions);
            ``(B) if such a parent is enrolled but fails to make 
        application to obtain coverage of such child, to enroll such 
        child under such family coverage upon application by the child's 
        other parent or by the State agency administering the program 
        under this title or part D of title IV; and
            ``(C) not to disenroll (or eliminate coverage of) any such 
        child unless--
                ``(i) the employer is provided satisfactory written 
            evidence that--

                    ``(I) such court or administrative order is no 
                longer in effect, or

                    ``(II) the child is or will be enrolled in 
                comparable health coverage which will take effect not 
                later than the effective date of such disenrollment, or

                ``(ii) the employer has eliminated family health 
            coverage for all of its employees; and
            ``(D) to withhold from such employee's compensation the 
        employee's share (if any) of premiums for health coverage 
        (except that the amount so withheld may not exceed the maximum 
        amount permitted to be withheld under section 303(b) of the 
        Consumer Credit Protection Act), and to pay such share of 
        premiums to the insurer, except that the Secretary may provide 
        by regulation for appropriate circumstances under which an 
        employer may withhold less than such employee's share of such 
        premiums.
        ``(4) A law that prohibits an insurer from imposing requirements 
    on a State agency, which has been assigned the rights of an 
    individual eligible for medical assistance under this title and 
    covered for health benefits from the insurer, that are different 
    from requirements applicable to an agent or assignee of any other 
    individual so covered.
        ``(5) A law that requires an insurer, in any case in which a 
    child has health coverage through the insurer of a noncustodial 
    parent--
            ``(A) to provide such information to the custodial parent as 
        may be necessary for the child to obtain benefits through such 
        coverage;
            ``(B) to permit the custodial parent (or provider, with the 
        custodial parent's approval) to submit claims for covered 
        services without the approval of the noncustodial parent; and
            ``(C) to make payment on claims submitted in accordance with 
        subparagraph (B) directly to such custodial parent, the 
        provider, or the State agency.
        ``(6) A law that permits the State agency under this title to 
    garnish the wages, salary, or other employment income of, and 
    requires withholding amounts from State tax refunds to, any person 
    who--
            ``(A) is required by court or administrative order to 
        provide coverage of the costs of health services to a child who 
        is eligible for medical assistance under this title,
            ``(B) has received payment from a third party for the costs 
        of such services to such child, but
            ``(C) has not used such payments to reimburse, as 
        appropriate, either the other parent or guardian of such child 
        or the provider of such services,
    to the extent necessary to reimburse the State agency for 
    expenditures for such costs under its plan under this title, but any 
    claims for current or past-due child support shall take priority 
    over any such claims for the costs of such services.
    ``(b) Definition.--For purposes of this section, the term `insurer' 
includes a group health plan, as defined in section 607(1) of the 
Employee Retirement Income Security Act of 1974, a health maintenance 
organization, and an entity offering a service benefit plan.''.
    (c) Effective Date.--(1) Except as provided in paragraph (2), the 
amendments made by this section apply to calendar quarters beginning on 
or after April 1, 1994, without regard to whether or not final 
regulations to carry out such amendments have been promulgated by such 
date.
    (2) In the case of a State plan under title XIX of the Social 
Security Act which the Secretary of Health and Human Services determines 
requires State legislation in order for the plan to meet the additional 
requirements imposed by the amendments made by this section, the State 
plan sh